Untitled - Carrefour

Transcription

No. 1 in Europe
No. 2 worldwide
29 countries
12,547 stores
456,295 employees
15,268,616
sq.m sales area
97.24 billion euros
of sales incl. tax under Group banners
3
More than
billion cash transactions
per year for all store formats
In forty years, the Carrefour Group has
become a leading international force
in retailing. As the second largest retailer
in the world and the largest in Europe,
the Carrefour Group now boasts over
12,500 stores operated directly by the
Group or under franchising agreements
in 29 countries, spanning four main
grocery store formats: hypermarkets,
supermarkets, hard discount stores and
convenience stores.
Americas region
Europe region
Asia region
Franchisee-partner
countries
12,547 stores
456,295 employees
An international, multi-format Group
operating in 29 countries
Breakdown of sales (incl. tax, under Group
banners) by format
Hypermarkets
292,877
1,040
employees
stores
58.7% Hypermarkets
23.8% Supermarkets
Supermarkets
9.5% Hard discount
81,344
2,425
employees
stores
8% Convenience, Cash & Carry
Hard discount
Breakdown of sales (incl. tax, under Group
region
banners) by geographic
geograp
46,302
5,798
employees
stores
47% France
39.8% Europe (excl. France)
Convenience, Cash & Carry
and Online commerce
4,523
employees
7.3% Americas
5.8% Asia
Convenience
3,130*
stores
Cash & Carry
154
stores
Online commerce
* Except for Sherpa and Proxi banners representing 1,541 stores in France.
Europe
Year of
establishment
Store locations as of 31 December 2006
Portfolio of stores
Number of
employees
Sales incl. tax under
Growth in sales incl.
banners in millions
tax under banners at
of euros
constant exchange rates
P
HY
M
ER
AR
KE
Fra
TS
h
nc
ise
d
P
SU
M
ER
AR
KE
Fra
TS
h
nc
ise
d
HA
DIS
RD
CO
UN
Fra
T
h
nc
ise
d
N
CO
VE
NIE
NC
E
n
Fra
ch
ise
d
S
CA
Y
RR
CA
ed
his
H&
nc
a
r
F
Total
France
1963
140 514
45 725
2,8 %
192
26
615
410
811
37
-
1 654
101
33
3,879
Spain
1973
70,134
14,087
3.4%
148
6
82
-
1,961
845
-
-
-
-
3,042
Italy
1993
26,551
7,677
4.9%
55
1
247
221
-
-
173
816
17
3
1,533
Belgium
2000
18,131
5,381
1.8%
56
-
79
202
-
-
-
224
-
-
561
Greece and Cyprus
1991
14,675
2,540
10.7%
25
-
164
4
295
100
51
151
-
-
790
Portugal
1992
6,155
1,386
6.2%
10
-
-
-
320
107
-
-
-
-
437
Poland
1997
17,265
1,359
12.4%
42
-
83
-
-
-
-
-
-
-
125
Romania
2001
4,462
607
32.8%
7
-
-
-
-
-
-
-
-
-
7
Switzerland
2001
2,294
637
0.4%
9
3
-
-
-
-
-
-
-
-
12
Turkey
1993
9,227
1,468
22.3%
13
-
91
-
393
42
-
-
-
-
539
168,894
35,140
5.5%
365
10
746
427
2,969
1 094
224
1 191
17
3
7,046
1975
47,254
4,636
7.3%
143
-
-
-
214
44
-
-
-
-
401
Argentina
1982
20,066
1,674
17.6%
30
-
118
-
325
49
-
-
-
-
522
Colombia
1998
Total
Latin America
Brazil
Total
6,454
819
27.6%
31
-
-
-
-
-
-
-
-
-
31
73,774
7,129
12.1%
204
0
118
0
539
93
0
0
0
0
954
345
Asia
China
1995
40,742
2,482
18.6%
90
-
-
-
255
-
-
-
-
-
Taiwan
1989
11,474
1,390
4.9%
47
-
-
-
-
-
-
-
-
-
47
503
0.2%
24
-
-
-
-
-
-
-
-
-
24
Thailand
1996
6,828
Indonesia
1998
9,869
689
27.2%
29
-
-
-
-
-
-
-
-
-
29
Malaysia
1994
3,538
251
9.0%
10
-
-
-
-
-
-
-
-
-
10
Singapore
1997
Total
662
102
1.7%
2
-
-
-
-
-
-
-
-
-
2
73,113
5,417
13.0%
202
0
0
0
255
0
0
0
0
0
457
-
-
-
-
63
10
Partner countries (franchised)
Belgium
2000
-
-
-
63
-
-
United Arab Emirates
1995
-
10
-
-
-
-
-
-
-
-
Saudi Arabia
2004
-
5
-
-
-
-
-
-
-
-
5
Oman
2000
-
1
-
-
-
-
-
-
-
-
1
Qatar
2000
-
2
-
-
-
-
-
-
-
-
2
Egypt
2002
-
3
-
-
-
-
-
-
-
-
3
Tunisia
2001
-
1
-
2
-
-
-
-
-
-
3
Algeria
2006
-
1
-
-
-
-
-
-
-
-
1
France (French
overseas territories)
1988
-
9
-
44
-
-
-
61
-
-
114
Dominican Republic
2000
-
1
-
-
-
-
-
-
-
-
1
2000
-
8
-
-
-
-
-
-
-
-
8
0
41
0
109
0
0
0
61
0
0
211
Japan
3,829
Total
16.2%
P
HY
Group total
456,295
97,240
5.4%
963
ER
MA
RK
ET
n
Fra
77
S
ch
ise
d
P
SU
1,479
ER
MA
RK
ET
n
Fra
946
S
ch
ise
d
R
HA
4,574
IS
DD
CO
U
NT
n
Fra
1 224
ch
ise
d
N
CO
224
VE
NIE
NC
E
n
Fra
2 906
ch
ise
d
S
CA
118
Y
RR
CA
ed
his
H&
nc
a
r
F
36
Total
12,547
2 Message from the Chairman
Promoting responsible trade
of the Supervisory Board
4 Interview with the Chairman
of the Management Board
4 0 Employees: Carrefour’s No.1 asset
4 2 Quality and ethical practices:
a corporate commitment
The year 2006
10 2006: a renewed drive for growth
12 Financial overview
14 Stock market overview
Changing retail models
18 New formats: reinvented stores
20 Hypermarkets
22 Supermarkets
4 4 Environment: act differently
The outlook for 2008…
4 8 A time to accelerate our pace
Corporate Governance
5 2 The Supervisory Board
5 6 The Management Board
and the Management Committee
24 Hard discount stores
26 Convenience stores
27 Cash & Carry and e-commerce
Strategy: a close relationship
with our customers
30 Price: a heightened offensive
32 Products: an enhanced offering
34 Loyalty programmes:
more benefits for customers
36 Services: a growth engine
Financial Report
6 1 Consolidated financial statements
1 1 6 LSF Report – 2006
1 2 9 Total stores
1 3 3 Commercial statistics
1 3 5 Addresses of principal subsidiaries
2 Carrefour Group
8
The year 2006
16 Retail models
MESSAGE FROM
THE CHAIRMAN
of the Supervisory
Board
Robert Halley
02
28 Strategy
38 Responsible trade
46 The outlook for 2008
2006 was a year of growth for the Carrefour group,
a result of the strategy instituted by the Management
Board over the past two years. On behalf of
the Supervisory Board and as the representative
of the Group’s shareholders, let me assure
the Management Board of my full support
and confidence in pursuit of this strategy,
which is already bearing fruit.
In 2006, the Carrefour group successfully seized every
potential opportunity for growth. Sales rose by 6.4%,
the strongest increase in four years. We opened
nearly 1,000 stores and our retail banners gained
market share overall. To achieve these results,
Carrefour made the right decisions and recaptured
a winning spirit.
50 Corporate Governance
59 Financial Report
I am convinced that Carrefour possesses all the
necessary assets to remain on this path towards
further growth and innovation. The Supervisory Board
will ensure that the Management Board and its teams
continue to implement their strategy in a rigorous
and responsive manner. Over the past 24 months,
the market has responded to the Group’s hard work.
There is no doubt that this will lead to the creation
of lasting value for shareholders. Staying firmly
on course is therefore essential to creating
this long-term value.
I am counting on the Management Board
and its teams to consolidate our 2006 achievements
by maintaining our policy of low prices and a diverse
offering and to forge ahead on other initiatives
as well. In an increasingly competitive global
environment, the Carrefour group must explore
new frontiers, offer new services and expand
its banners in high-potential emerging markets.
Robert Halley
“
CARREFOUR POSSESSES
ALL THE NECESSARY ASSETS
TO REMAIN ON THIS PATH
TOWARDS FURTHER GROWTH
AND INNOVATION.
”
03
2 Carrefour Group
8
The year 2006
16 Retail models
28 Strategy
INTERVIEW WITH
THE CHAIRMAN
of the
Management
Board
José Luis Duran
04
Q José Luis Duran, how would you
assess the Carrefour group overall
in 2006?
Through our efforts in 2006, Carrefour
is moving and growing again.
We set new records for store openings
and maintained a downward pressure
on prices.
Our European stores are once again
competitive and our low-price policy
has strengthened our positioning in key
markets. As a result, in 2006 our grocery
market share in France rose 0.5%*
to 26%, consolidating our market lead.
Sales grew at the strongest rate
in four years, rising 6.4% at constant
exchange rates—a two-point gain
over our increase in 2005. That’s the
tangible result of our customer-focused
policy of growth and competitiveness.
Every day, in each and every one
of our stores, we have continued
our low-price policy backed by
customer loyalty programmes,
while expanding our product
mix and encouraging innovation
in our departments.
We accelerated our growth by
opening nearly 1,000 points of sale,
amounting to 1.4 million sq.m
in one year, and we plan to maintain
that pace in the coming years.
We also grew our business through
tactical acquisitions. Our latest
acquisition was that of Poland’s Ahold
in December 2006, which has vaulted
Carrefour Polska to the number two
position in the market.
The key strength of our strategy lies
in not being dependent on one single
market or format. The Group’s
multi-format strategy, which we are
developing worldwide, is now proving
more effective than ever.
Q In 2005, you announced that
your two priorities were growth
and customers. You have just
explained how the Group has
continued to grow. What have
you done for the customer?
Our entire workforce is focused on
our top priority: satisfying the customer.
Every day, our employees mobilize
their full expertise in improving
our business, providing better service
to our current customers and attracting
new ones as well.
This focus on customers means that
we put prices front and centre.
In 2006, we worked very hard to lower
prices and that’s what we’ll continue
to do this year and in the years
to come. We’re seeing the first signs
of improvement in our price image
in several countries and France
in particular. Winning long-term market
share depends on our ability to offer
the best prices to our customers.
Focusing on customers also means
offering them a wider selection,
a more attractive array of products
and services suited to local tastes.
We have expanded our product mix
in both the food and non-food
categories by, for example, offering
greater innovation in our own brands.
For non-food products, we’re
emphasizing high-growth categories
like apparel, housewares and baby
products.
59 Financial Report
We’re also expanding our retail
services. For example, Carrefour Spain
was the first retailer in that country
to offer a mobile telephone service
under its brand name (October 2006).
In France we launched a similar MVNO
service in November 2006. Many other
innovative services are available to our
customers, such as the financial service
packages we offer at Champion
in France. And to improve our service
offerings still further, Carrefour is
developing an e-commerce operation
to provide an additional retail channel
alongside our stores. In France, 2006
also marked the launch of Boostore.
com, a Web site dedicated
to non-food products.
Lastly, our focus on customers means
that we serve them better by getting
to know them better. For that purpose,
we have expanded our customer
databases. By mining the information
contained in these databases, we can
tailor our products, services, prices and
customer relations programmes to our
customer base with even greater
precision. Effective customer-loyalty
practices are being widely adopted
throughout the Carrefour group.
For example, Carrefour Polska has
introduced its first loyalty card, which
can be used at Champion, Globi
and Carrefour Express. This initiative
puts Carrefour ahead of the curve
in the Polish retail market.
As we expand our offering, we’re also
improving the quality of our customer
service at the point of sale. In 2006
we boosted the presence and visibility
of employees throughout our stores,
to provide better customer service
and encourage more decision-making
among those in day-to-day contact
with customers.
* Source: TNS Worldpanel.
Grocery market share.
05
2 Carrefour Group
8
16 Retail models
Q Lifestyles and modes of
consumption are changing
not only in France but everywhere
that Carrefour operates.
Are your stores changing as well?
Q
Consumption patterns are constantly
changing and we view this as
an opportunity to update our store
formats and retail concepts in an
increasingly competitive environment.
In line with its values, the Carrefour
group has long promoted fair trade
in every country in which it operates.
As a major economic player, we are
fully mindful of our responsibilities.
Our customers and partners expect
more than commitments; they want
actions and results. Carrefour’s retail
banners actively contribute to the
economy of the regions in which
they are located. In each country,
some 90% of our products are bought
locally and in many cases from small
or medium-sized businesses. As a result,
we help to create jobs in numerous
local industries.
We’re also involved in local community
life. We participate in long-term
programmes involving education,
health care and job training for young
people in countries as diverse
as Colombia, Brazil and Taiwan.
Moreover, we take action to protect
the environment by raising awareness
among our customers and suppliers
of the need to preserve natural
resources. Our teams also work
to reduce our impact on nature
by adopting an eco-friendly approach
to the design of our stores. More
specifically, following the construction
in France of two Champion stores
built to High Environmental Quality
standards, Carrefour will open the first
eco-friendly hypermarket in Beijing
in 2008.
We have taken a fresh look at our
traditional formats in order to improve
the quality of our products and
services while at the same time
maximizing every opportunity for
growth. The strength of our brand
allows us this flexibility in adapting
our formats. With our hypermarkets
of less than 5,000 sq.m, we are
establishing a presence in mid-sized
cities in Poland, Colombia and China,
and in mature markets as well.
In Spain, for example, we’ve opened
18 Carrefour mini-hypermarkets.
In addition, in several countries
we have begun to exploit the power
of the Carrefour brand by developing
even smaller formats, particularly
at the supermarket level. In Spain
we opened 82 supermarkets in 2006
under the name Carrefour Express.
This innovative strategy also extends
to the hard-discount format, such
as our 135 newly opened MaxiDia
stores in Spain.
All of our testing is designed to
maximize our return per square metre
in order to offer customers a wider
selection and a better availability
of products within a single retail
space. We’re also reviewing product
presentation and store layouts to make
it easier for customers to shop
and understand in-store signage.
Several laboratory stores have been
established in France, Belgium and
Italy as well as Colombia and Taiwan,
and initial results are encouraging.
06
The year 2006
Governments and consumers
alike gave signs of an increasing
concern for matters of social
responsibility in 2006. How is
Carrefour responding to this issue?
28 Strategy
Q How does Carrefour demonstrate
its social responsibility in more
specific terms?
In the retail business, men and women
play a central role. They represent
our greatest asset for both customers
and our brand. The Carrefour group
is the world’s 11th largest private
employer, all industries combined,
with more than 456,000 employees
worldwide. In France, we’re the top
private employer, with over 140,000
employees. Each year our subsidiaries
hire a total of more than 100,000
people throughout the world. In France
alone, we hire some 15,000 new
employees annually. The Group’s
sustained growth will naturally lead to
greater employment worldwide:
our growth creates jobs.
In terms of job quality, it’s important
to point out that we provide many
young people and low-skilled workers
with access to their first experience
with employment. Moreover, thanks
to the training we offer and a wide
range of over 100 career paths, we
also offer genuine opportunities for
career advancement. Take China,
for example: we open about 20 stores
there annually, so every year we need
to train approximately 20,000 new
employees, including nearly 1,000
managers. At Carrefour, we offer
career advancement opportunities
to everyone, including opportunities
abroad, without regard to a college
degree. In addition, the Group prefers
to promote from within; more than
half of our managers have come up
through the ranks.
Finally, thanks to our global presence
and our wealth of professional
expertise, our teams reflect an
incredibly wide range of skills and
cultures. This diversity is Carrefour’s true
strength; it allows the Group to adapt
seamlessly to every region in which
it operates, particularly because
we hire most of our employees
from the local community.
Q What are your projections for 2007
and thereafter? Does Carrefour plan
to continue its strategy of growth
and its commitment to customers?
Our priorities haven’t changed.
In 2006, we set a goal and we’re
staying the course. In 2007, we plan
to accelerate our deployment
of this strategy. With regard to growth,
we’ll be adding at least 1.5 million sq.m
of surface area in 2007 – a total of
1,000 stores, including
100 hypermarkets, all banners
combined.
On behalf of our customers, we are
firmly moving ahead with our ongoing
low-price policy while offering more
promotions, especially in our
hypermarkets. For the third consecutive
year, we have set a goal of increased
market share, particularly in France.
Also for our customers, we’ll continue
to offer a wider variety of food and
non-food items and to draw on the
high level of brand recognition that
our brands enjoy among consumers.
With this goal in mind, we will capitalize
on the experiments we conducted at
our various stores in 2006.
59 Financial Report
“
2006 MARKED A NEW DYNAMIC
OF GROWTH AT CARREFOUR.
SUCH MOMENTUM CAN ONLY
BOOST OUR CONFIDENCE. ON
BEHALF OF THE MANAGEMENT
BOARD, I WOULD LIKE TO THANK
THE WORKFORCE FOR ITS
ENERGY AND DETERMINATION
THROUGHOUT 2006. I AM
CONFIDENT THAT CARREFOUR
EMPLOYEES ARE ALREADY
POISED TO MAKE 2007 A YEAR
OF ACCELERATED GROWTH.
”
Lastly, we’ll look toward new markets
as well. That means local acquisitions
in countries where we currently
operate, but it also includes the
possibility of establishing a presence
in new countries, such as Russia
and India. However, any such store
openings will have to satisfy three
criteria: we must be able to capture
a leading market position within
the medium term, establish our brand
quickly and secure a return on
investment. It is only under these
conditions that we will expand
our scope of operations.
2006 marked a new dynamic of
growth at Carrefour. Such momentum
can only boost our confidence.
On behalf of the Management Board,
I would like to thank the workforce
for its energy and determination
throughout 2006. I am confident
that Carrefour employees are
already poised to make 2007
a year of accelerated growth.
07
2
Carrefour Group
8 The year 2006
16 Retail models
28 Strategy
“2006 was marked by accelerated growth within the Group. We are seeing
renewed momentum.”
José Maria Folache,
member of the Management Board
The year
2006
08
10
2006: a renewed drive for growth
12
Financial overview
14
Stock market overview
59 Financial Report
09
2
Carrefour Group
8 The year 2006
16 Retail models
28 Strategy
2006: a renewed drive
for growth
Once again, a combination of organic growth and acquisitions led to the opening
of nearly 1,000 new stores. Here we look back on a year of growth.
Q
Growth: staying the course
Growth is central to the Carrefour
group’s strategy. In 2005 Carrefour
embarked on a new commitment
to growth by expanding the number
of new store openings. The Group
opened over 100 new hypermarkets
worldwide in 2006 and nearly
1,000 new stores altogether. New retail
formats have been deployed as well,
with the result that the Group now
has a presence in formats of every size.
Occupying the number one position
in all our markets is key to offering
the best prices and keeping our trade
names foremost in consumers’ minds.
Q
Renewed momentum
• In 2006, the Carrefour group
achieved its sales growth objective,
with a 6.4% increase in sales at
constant exchange rates.
• France’s sales strategy also showed
results, with a 0.5%* rise in grocery
market share.
• At the global level, China, Greece,
Poland, Colombia, Argentina
and Indonesia showed strong
sales growth.
Q
Record growth
• 1.4 million sq.m of new sales floor
area (90% from organic growth),
marking a 20% increase over 2005.
• An increased rate of hypermarket
openings in key countries:
- China: 21 openings,
- Taiwan: 11 openings,
- Spain: 10 openings,
- Colombia: 10 openings,
- Indonesia: 9 openings,
- Brazil: 9 openings,
- Poland: 8 openings.
* Source TNS Worldpanel.
010
Targeted tactical
acquisitions in Europe
Q
Acquisitions have rounded out
the growth initiative begun in 2005.
For example:
• In Poland, the acquisition of Ahold
Polska** catapulted the Group to
the number two position in the
country’s grocery retail market;
• In Romania we cemented our
market position by integrating
six Hyparlo hypermarkets;
• In Spain, we acquired four
hypermarkets and two petrol stations
from Caprabo in January 2006.
Consistent with our strategy
of disposing of non-strategic
or underperforming businesses,
Carrefour withdrew from
the South Korean market, selling its
32 hypermarkets in the country.
** Subject to regulatory approval.
+0.5%*
968
103
1.4
gain in grocery market
share in France
new Carrefour
hypermarkets
new stores
million
sq.m of new sales
surface area
59 Financial Report
Expansion
of Carrefour
Polska
Carrefour’s aggressive strategy
in Poland bore fruit in 2006.
Through its acquisition of
Ahold Polska, Carrefour
captured a leading share
of the Polish market; 194 stores,
including 15 hypermarkets,
with a total of 180,000 sq.m
were added to the Group**.
Carrefour Polska accelerated
its growth in 2006, developing
new store formats like
Carrefour Express and
opening a mini-hypermarket
in September 2006.
** Subject to regulatory approval.
011
2
8 The year 2006
Carrefour Group
16 Retail models
28 Strategy
Financial overview
2006 was a year of growth during which Carrefour’s new business model began to take shape.
Mobilized behind its two strategic orientations, customers and profitable growth, the Group fulfilled its objectives:
- Sales rose by 6.4% at constant exchange rates—besting the growth rate in 2005 by over two percentage points.
- Grocery market share increased in France for the second consecutive year.
- Nearly one thousand new stores were opened, including over 100 hypermarkets—double the rate achieved in 2004.
Every geographical region contributed to the increase in sales. In particular, Latin America and Asia both posted double-digit
growth in sales at constant exchange rates.
Activity Contribution before depreciation and amortization grew by 5.7%, generally in line with sales, while activity contribution
rose by 3.4%.
Group Share of net income rose by 3.3%.
Breakdown of consolidated net
sales by geographic region
Breakdown of consolidated
net sales by format
Breakdown of activity contribution
47.8% France
58.9% Hypermarkets
52.7% France
38.3% Europe
17.4% Supermarkets
37.1% Europe
(excl. France)
(excl. France)
9.1% Hard Discount
7.6% Latin America
stores
5.0% Latin America
6.3% Asia
14.6% Other stores
5.2% Asia
TOTAL 177,901M
Consolidated net sales:
e77,901 million.
Q
In 2006, consolidated sales grew by
6.6% at current exchange rates and
6.4% at constant exchange rates,
exceeding the rate of growth posted
in 2005 and 2004 by two points. By
comparison, growth in sales in 2005 at
constant exchange rates and after
application of IFRS 5 was 4.3%.
In 2006, the Carrefour Group sold its
operations in South Korea.
In addition, the Group acquired six
hypermarkets in Spain and 29 stores
for the Dia trade name in Andalusia.
In Italy, the Group purchased
six franchised supermarkets
and 15 convenience stores.
Sales in France rose by 4.6% in 2006.
Sales in Europe increased by 6.2%,
012
TOTAL 177,901M
while in Latin America and Asia sales
grew by 16.8% and 14.0% respectively.
Activity Contribution
before depreciation
and amortization: 14,845 million
Q
Thanks to a slight increase in the
margin from current operations, Activity
Contribution before depreciation and
amortization rose by 5.7%, generally in
line with sales, despite increased costs
primarily driven by higher rental
payments.
Group activity contribution:
13,258 million
Q
As projected, Activity Contribution
increased at a more moderate pace
than sales, as a result of the low-price
policy and costs tied to the acceleration
in the Group’s expansion programme.
TOTAL 13,258 M
Activity Contribution rose by 3.4%,
and every geographic region
contributed to this growth.
The increase was 0.3% in France,
5.5% in Europe, 21.8% in Latin America
and 5.4% in Asia.
Q
Debt:
Net debt stood at 16,309 million
at the year end, a reduction
of 1481 million from 2005.
The ratio of net financial debt to
shareholders’ equity was 60%,
an improvement over 2005.
Financial expense increased by 6.6%
over the year, while coverage of
financial expenses stood at 10.1 X.
Q Net income from recurring
operations – Group share:
51,857 million
59 Financial Report
Net income from recurring
operations per share: 52.64
Q
Net income from recurring operations
per share was 12.64, an increase of 2.5%
over 2005.
Net income from recurring operations –
Group share grew by 3.3%, despite a 6.6%
increase in financial expenses. The taxation
rate for 2006 stood at 29%, compared with
29.3% in 2005.
The Group Share Net Income per share
taking into account the proceeds
from operations that were sold or are
in the process of being sold, was 13.22
in 2006, versus 12.05 in 2005.
The 2006 financial statements are presented in accordance with IFRS principles.
The 2005 financial statements have been restated to reflect the IFRS 5 standard. They have
been adjusted for disposals that occurred or were announced during the course of 2006.
Consolidated net sales
(in millions of euros)
Activity Contribution before
depreciation and amortization
2005
73,060
77,901
2006
operations – Group share
2005
1,798
1,857
2006
2005
Activity contribution
4,582
4,845
2006
2005
2006
3,152
3,258
operations per share (in euros)
Net debt (as a percentage
of shareholders’ equity)
2005
2.58*
2005
2006
2.64
2006
72
60
* Published in 2005.
Debt:
Net sales:
177.9
billion
Activity contribution:
13,258
million
10.1 x
= ACDA/Financial Expense
operations – Group share:
11,857
million
operations per share:
12.64
013
2
8 The year 2006
Carrefour Group
16 Retail models
28 Strategy
Stock market overview
Capital
At 31 December 2006, Carrefour’s equity capital totalled 1,762,256,790 euros.
This was made up of 704,902,716 shares with a par value of 2.50 euros and is unchanged from 31 December 2005.
Q
Distribution of capital
The capital structure at 31 December 2006 was as follows:
Shareholders
Halley family group
Employees
Number
of shares
In %
Number of ordinary
voting rights
In %
Number of extraordinary
voting rights
In %
95,307,541
13.52
168,762,694
20.47
168,762,694
20.47
8,619,876
1.22
17,216,097
2.09
17,216,097
2.09
1
0.00
Owned shares
Controlled shares
0.00
0.00
0
0.00
Public
600,975,298
85.26
638,318,397
77.44
0.00
638,318,397
77.44
0.00
Total
704,902,716
100.00
824,297,188
100.00
824,297,188
100.00
Carrefour stock
Carrefour is listed on the SRD Eurolist (Deferred Payment Service, ISIN code FR 0000120172).
It is included in the following indices: CAC 40, DJ Euro Stoxx 50 and DJ Stoxx 50. On 29 December 2006,
the share was in 9th position in the CAC 40 index in terms of market capitalization, with a weighting of 2.87%.
(in euros)
Quoted price:
2002
2003
2004
2005
2006
highest
58.15
46.34
44.11
41.75
51.15
lowest
38.07
29.35
33.70
35.36
38.10
on 31 December
42.43
43.52
35.04
39.58
45.94
716,141,771
716,142,383
705,119,550
704,902,716
704,902,716
30.4
31.2
24.7
27.9
32.4
2,567,064
2,513,291
3,028,232
2,613,756
3,117,619
-
-
2.56
2.58
2.64
Number of shares on 31 December
Market capitalization on 31 December
(in billions of euros)
Average daily volume
Net income per share from recurring operations
Net dividend
Yield
0.64
0.74
0.94
1
1.50%
1.70%
2.70%
2.53%
* Subject to the approval of the shareholders at their Annual Meeting on 30 April 2007.
014
1.03*
2.24%
59 Financial Report
Dividend per share (in euros)
Share price movements in 2006
compared with the CAC 40 index (basis 100)
compared with the BEFOODR index* (basis 100)
2002
130
0.64
0.74
2003
122.5
BEFOODR
116.5
CAC 40
115.3
Carrefour
120
110
2004
0.94
2005
1
1.03*
2006
* Subject to the approval of the shareholders at their Annual
Meeting on 30 April 2007.
The Dividends are prescribed after five years to the benefit
of the State.
100
90
Jan.
Feb.
March
April
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
* The BEFOODR index includes: Carrefour, Casino, Colruyt, Delhaize, Sainsbury, Ahold,
Metro AG, Wm Morrison and Tesco.
Shareholder information
2007 calendar of
financial information:
Carrefour Group shareholders have access to transparent,
accurate and regularly updated information through:
Q
Q
A telephone number for shareholders
Service available 7 days a week, 24 hours a day.
By dialing +33 (0)1 55 63 39 00, shareholders have access
to the following information:
• Group news and important events;
• The share price, its movement and that of the CAC 40;
• The calendar of meetings and financial publications — contact information
can be left by voice mail to receive the Letters to Shareholders,
the Shareholder’s Guide or the Annual Report;
• Pure registered shares and their advantages — the shareholder is put
through to an adviser of the Credit Agricole Indosuez Corporate Trust,
appointed by Carrefour to manage registered shares;
• The Group’s strategy and outlook, by contacting the Shareholders’ Service.
Q
2006 Annual results
8 March 2007
Q 2007 first quarter sales
11 April 2007
Q Shareholders’ Meeting (on 2nd notification)
30 April 2007
Q Payment of dividend
4 May 2007*
Q 2007 second quarter sales
10 July 2007
2007 half-yearly results
30 August 2007
Q 2007 third quarter sales
Q
16 October 2007
* Subject to the approval of the shareholders
at their Annual Meeting.
A Shareholders’ e-mail alert
Register under the “Shareholders” section of the Carrefour website:
http://www.carrefour.com.
Q
The Letter to Shareholders
Sent to all registered and bearer shareholders who request it,
the Letter to Shareholders appears twice a year, following the publication
of the half-yearly and annual results.
Q
The Shareholder’s Guide
Contains all the essential information on the Group and share management.
Q Meetings: the Annual Shareholders’ Meeting, other shareholder meetings
or meetings during the Paris Actionaria Exhibition. A schedule of upcoming
meetings can be found on the Group website, www.carrefour.com.
Contacts:
Carrefour Group
Q
Investor Relations
26 quai Michelet - TSA 20016
92695 Levallois-Perret Cedex
Tel.: +33 (0)1 55 63 39 00
investisseurs@carrefour.com
Carrefour Group
Q
Shareholder Relations
26 quai Michelet - TSA 20016
92695 Levallois-Perret Cedex
Tel.: +33 (0) 1 55 63 39 00
actionnaires@carrefour.com
Q
Registered shareholders
CACEIS Corporate Trust
Service Émetteurs-Assemblées
14, rue Rouget de Lisle
92862 Issy-les-Moulineaux Cedex 09
Tel.: +33 (0)1 57 78 34 44 • Fax: +33 (0)1 57 78 34 00
015
2
Carrefour Group
8
The year 2006
16 Retail models
28 Strategy
“The era of standardized stores has gone by the wayside; to stay on top,
we have to adapt and innovate.”
Guy Yraeta,
Changing
retail models
016
18
New formats: reinvented stores
20
Hypermarkets: a model in constant change
22
Supermarkets: a redefined format
24
Hard discount stores: building on success
26
Convenience stores: highly adaptable
27
Cash & Carry and e-commerce
59 Financial Report
017
2
Carrefour Group
8
The year 2006
16 Retail models
28 Strategy
New formats:
reinvented stores
In response to
its customers’
changing lifestyles,
the Carrefour group
has been testing
new store concepts.
Rollout began
in 2006.
Since 2005, the Group has been breaking
the link between trade name, format
and sales floor area. Initial market tests
demonstrated their growth potential,
so these new concepts have been
implemented and adapted in a number
of countries.
Q
MaxiDia: a focus on discount prices
A true hard discount supermarket, MaxiDia
offers the lowest prices for groceries and
boasts a wide range of fresh products as
well as everyday household items sold
primarily under the Dia brand name. Larger
than the traditional format at 1,000 to 1,200
sq.m, MaxiDia features more product variety
plus parking facilities for easy access. By
year-end 2006, Spain had 135 MaxiDia stores.
Mini Hyper: big selection
in a smaller package
Q
These are hypermarkets located in mid-sized
cities or towns that cannot accommodate a
traditional hypermarket. Their appeal is
based on food promotions and their
product range, including a particularly
compact and carefully chosen selection of
018
non-food products. The stores offer a broad
but shallow product mix at hypermarket prices
in a sales floor area of 2,500 to 4,000 sq.m.
Store brands account for 25% of sales.
Stores converted into Mini Hypers boosted
their sales by approximately 40%. In 2006,
18 Mini Hypers opened in Spain.
Carrefour Express:
a successful supermarket
Q
The brand, the products, the “all under one
roof” concept: the format behind Carrefour
Express borrows heavily from its older sibling,
the Carrefour hypermarket, but on a much
more compact scale. With a sales floor area
of no more than 2,500 sq.m, this format offers
about 6,700 separate products, a third of
which are store brands at hypermarket
prices. Stores converted to the Carrefour
Express format have seen their sales increase
by an average of 30%. Eighty-two Carrefour
Express stores were opened in Spain during
2006. The concept has also been adapted
to the Brazilian market under the Carrefour
Bairro trade name, and pilot projects have
been conducted in Poland and Turkey.
59 Financial Report
Urban supermarkets:
putting customers first
For busy city-dwellers,
shopping should offer
a moment to relax.
To satisfy the need for
quick and easy shopping,
the Carrefour group
recently introduced
a new supermarket
format designed for
active and fairly affluent
customers living in city
centres. These more
sophisticated stores
are open until late
in the evening, offering
prepared meals,
a wide selection of fresh
products and an express
lane for shoppers
who wish to save time.
Champion currently
operates 30 such stores
in France. In Italy, GS Top
is testing this concept
as well with five newly
renovated supermarkets
in Milan. The store serves
hot meals and customers
pressed for time can
use the “Spesa Veloce”
(express checkout) area.
135
MaxiDia in Spain
141
Carrefour Express,
including 82 in Spain
019
2
Carrefour Group
8
The year 2006
16 Retail models
28 Strategy
Hypermarket locations throughout the world at 31 December 2006
Europe region: 602
Belgium: 56
Spain: 154
France: 218
French overseas
departements
and territories: 9
Greece
and Cyprus: 25
Italiy: 56
Poland: 42
Portugal: 10
Romania: 7
Switzerland: 12
Turkey: 13
Latin America
region: 205
Asia region: 210
China: 90
Indonesia: 29
Japan: 8
Malaysia: 10
Singapore: 2
Taiwan: 47
Thailand: 24
Middle East
North Africa region:
23
Argentina: 30
Brazil: 143
Colombia: 31
Dominican Republic: 1
Algeria: 1
Egypt: 3
Oman: 1
Qatar: 2
Saudi Arabia: 5
Tunisia:1
United Arab Emirates: 10
Franchisee-partner countries
1,040
hypermarkets throughout the world
Hypermarkets: a model
in constant change
The Carrefour group,
the world’s top
hypermarket retailer,
increased the
number of store
openings in 2006.
The Group now
operates over
1,000 hypermarkets
in 29 countries.
020
Q
An appealing format
In 2006, Carrefour hypermarkets enhanced
their appeal in three major ways:
• An improved, expanded offering, including
broader food and non-food product lines,
particularly with regard to own brands, as
in France and Italy.
• Competitiveness, with the ultimate goal of
offering the lowest prices in each
catchment area throughout the year. This
has boosted the price image of the
Group’s hypermarkets, which in turn has
helped to attract new customers.
• A wider range of services: insurance,
financial services, home computer support,
travel and entertainment reservations,
mobile phones and more.
Carrefour celebrates
its 1,000th hypermarket!
Q
On 28 October 2006, Carrefour inaugurated
its 1,000th hypermarket worldwide and
its 84th in China. Located on the outskirts
of Beijing, the Tongzhu hypermarket is
the seventh to be built in the Chinese
capital. Opening day was an enormous
success: 50,000 customers crowded into
the store, which sold seven metric tons
of rice in just a few hours. Energized by
a booming consumer market, the Group
plans to open new hypermarkets in China
at the rate of 20 per year.
Carrefour opens two new
hypermarkets in France
1 March 2006
Carrefour’s 217th hypermarket
in France opened its doors in
the town of Argelès-sur-Mer
on France’s Mediterranean
coast, in partnership with
the Eroski-France group.
Formerly operating under
the Champion banner,
the store was expanded
in size from 1,300 sq.m
to 4,200 sq.m. One new
feature is a large selection
of non-food products (such
as videos, mobile phone
service, multimedia items
and apparel) and services
(including event ticketing
services, financial services
and photo developing).
23 September 2006
The town of Montélimar,
located in southern France,
is home to the country’s
218th Carrefour hypermarket.
The result of a four-month
renovation to replace a
Champion supermarket
located on the site since
1984, the store now features:
• a sales floor area enlarged
by 1,200 sq.m,
• an expanded offering
of 16,000 product listings.
The hypermarket employs
a workforce of 130. Reflecting
the Group’s new serviceoriented policy, the new
store offers customers a wide
array of services, including
an interactive terminal
with direct access to
the Boostore.com website.
Over-the-counter
drugs at Carrefour
Italy
Carrefour customers are
reaping the benefits of Italy’s
recent liberalization of drug
sales. Since 2 September
2006, Carrefour stores in Turin
and Milan have added
something completely new
to their product offering:
over-the-counter drugs are
now on sale in a special area
under the careful supervision
of licensed pharmacists.
Carrefour is remaining true
to its general pricing policy,
offering the lowest prices
in its catchment area.
And holders of the PASS
customer loyalty card
enjoy an added benefit:
an extra 5% discount
on every product.
59 Financial Report
58.7%
of sales incl. tax under
the Group’s banner
103
new Carrefour hypermarkets
worldwide
Up to
80,000
product listings
Sales floor areas of
5,000
20,000
to
sq.m
021
2
Carrefour Group
8
The year 2006
16 Retail models
28 Strategy
Supermarket locations throughout the world at 31 December 2006
Europe region: 2,305
Belgium: 344
France: 1,025
French overseas
departements
and territories: 44
Greece: 168
Italy: 468
Poland: 83
Spain: 82
Turkey: 91
Latin America region: 118
Argentina: 118
Middle East
North Africa region: 2
Tunisia: 2
Franchisee-partner countries
2,425
supermarkets throughout the world
Supermarkets:
a redefined format
Our supermarket
network saw major
changes in 2006.
Today’s stores are
larger and more
modern, with
a more intensive
focus on quality
and the local
community.
022
Q
An international format
The supermarket format accounts for 23.8%
of gross sales (incl. tax) under Carrefour
group banners and some 20% of its retail
network, with 2,425 stores in nine countries.
With a flexible format that can be adapted
to the local environment, supermarkets
change with the times. Whether in Warsaw,
Istanbul, Madrid or Paris, supermarkets are
continually evolving and developing new
products and services. Positioned mid-way
between hypermarkets and hard discount
stores, they offer convenience, ease
of shopping and a wide selection.
Stores backed by
strong trade names
Q
The Group relies on trade names that are
well-known to local consumers. In France,
the Champion banner, which celebrated
its 35th anniversary last year, boasts a high
level of name recognition. One-third of
the French population shops at Champion,
which attracts 7.5 million customers
every week.
In Spain, the Group opted to capitalize
on the Carrefour banner, which is widely
recognized in that country. For that reason,
the name “Carrefour Express” was
developed for customers seeking
Carrefour products and brands in their own
neighbourhoods. The Carrefour Express
concept is also being implemented
in Poland, Turkey and Brazil. Elsewhere,
Carrefour draws on local trade names
that are widely familiar, including Champion
Marinopoulos in Greece, GB in Belgium
and GS in Italy.
Q
Modernizing the retail network
In city centres, a highly urban supermarket
concept has been developed, designed
specifically to provide customers with
low prices and a selection tailored to
their needs, all in a service-oriented
environment. In 2006, 30 Champion stores
in France were remodeled in line
with this concept. The results have been
encouraging. With a sales floor area limited
to 1,000 sq.m, these stores are intended
to make life easier for their customers.
They mainly sell grocery products with an
emphasis on fresh foods, and feature a large
number of check-out counters, including
automated check-outs, as well as a pleasing
environment, with background music in
the produce department and subdued
lighting throughout. The stores are
practical and comfortable.
In Italy, the new GS Top concept offers
upscale stores for a demanding urban
clientele. An urban concept is also being
tested in Argentina under the name Norte.
Champion: new challenges,
new horizons
Q
Champion, France’s second largest
supermarket network, once again gained
market share in 2006. The retailer operates
1,025 supermarkets and is focusing on
two major growth strategies: accelerate
its expansion and continue efforts to update
the retail concept.
59 Financial Report
2,425
supermarkets worldwide
23.8%
of gross sales, incl. tax,
under the Group’s banners
A presence in
9
82
countries
Carrefour Express
stores in Spain
023
2
Carrefour Group
8
The year 2006
16 Retail models
28 Strategy
Hard discount locations throughout the world at 31 December 2006
Europe region: 4,911
France: 848
Greece: 395
Portugal: 427
Spain: 2,806
Turkey: 435
Asia region: 255
China: 255
Latin America region: 632
Argentina: 374
Brazil: 258
5,798
hard discount stores throughout the world
Hard discount:
building on success
In 2006, the
Carrefour group
expanded its hard
discount format
at a faster pace,
opening more
than 500 stores.
Q
A booming format
Carrefour’s hard discount segment, No.3
in its sector in Europe, has a clear goal:
to rank among the top three discount
grocery retailers in every country in which
the Group operates. In 2006, the segment’s
total sales rose 11.3%: a remarkable
performance, especially in Dia International’s
three major countries – Spain, France
and Portugal. In France, sales at ED stores
also increased, climbing 13.3% to 2.7 billion
euros. The Carrefour group plans to open
400 new stores in 2007.
Q
Dia, a global benchmark brand
The essentials and nothing but the essentials
at the lowest price: that’s the mission of
Carrefour’s hard discount stores, which
consequently offer a mix of basic health
and cleaning products in addition to
grocery items. Spearheading the hard
discount segment, the Dia brand is
distributed worldwide. Alongside a selection
of key major brands, the Dia brand forms the
core of the product offering on store shelves
and meets a full range of household needs.
Q
Maxi Dia: a new growth engine
At year-end 2006, Dia International,
comprising all of the Group’s hard
discount stores, totaled 5,798 stores,
as compared to 5,451 one year earlier.
It also includes Maxi Dia, a network of stores
based on an original and dynamic concept.
The stores measure over 1,200 sq.m and
feature parking facilities and an expanded
offering of non-grocery items.
024
Q
ED continues to soar
Created in 1978 in Paris, the Ed banner,
which ranks second among hard discount
retailers in France, continues its upward
path. Growth at the chain has accelerated
significantly over the past three years.
In 2006, Ed successfully integrated the
Penny stores acquired from Rewe in 2005.
A number of new services were introduced
in Ed retail outlets during 2006, such as
rechargeable phone cards; at the same
time, a new product mix was developed
for these 1,200 sq.m stores, including a wider
selection of non-food items. These efforts
have resulted in greater customer retention
by providing a comprehensive range
of products and services, all offered
at discount prices – and designed to satisfy
a clientele that demands both quality
and low prices.
59 Financial Report
Hard discount stores:
+11.3%
increase in sales
5,798
stores worldwide
544
new stores in 2006
135
MaxiDia stores in Spain
025
2
Carrefour Group
8
The year 2006
16 Retail models
28 Strategy
Locations of convenience stores in Europe
at 31 December 2006
Europe region: 3,130*
Belgium: 224
France: 1,654*
French overseas departements
and territories: 61
Greece: 202
Italy: 989
* Other than concession stores
(Sherpa and Proxi), which account
for 1,541 stores in France.
3,130*
convenience stores in Europe
Convenience stores and other
formats: highly adaptable
In 2006, the
Carrefour group
continued
to expand its
convenience store
banners in Europe.
The segment
comprises a total
of 3,130* stores
in five countries.
026
Q
Convenience stores: rising value
• Each convenience store banner responds
to the specific needs expressed by its
customers. These banners include Shopi,
Marché Plus, 8 à Huit, Proxi and Sherpa in
France; Contact GB and GB Express in
Belgium; Di per Di in Italy; and
5’ Marinopo ulos, Smile Market and Ok in
Greece. In France, our convenience stores
attract over five million customers a month
and have captured 24.1% of the market.
• Success built on success in 2006, when
the Carrefour group opened a total of
196 new stores. By constantly updating
their goods and services, the convenience
stores are responding to a twofold
challenge:
- Adapting to sociodemographic changes
(including the rising number of singleperson households and an aging
population)
- Saving customers time and providing
solutions by offering products
and services suited to their daily needs
and good value for their money,
all in a friendly environment.
Q
New DìperDì format opens in Italy
In Italy, DìperDì is taking on a completely
new look, with an innovative store in
a central area of Rome. The store has
a more modern image in tune with
its urban clientele and includes an area
open 24/7 with vending machines
containing basic food items
and hot dishes.
59 Financial Report
8 à Huit at a train
station near you
The 8 à Huit convenience store
demonstrates once again Carrefour’s
responsiveness to modern consumer
needs. What’s the novelty? Opening
of stores in high-traffic areas. An 8 à Huit
store, for example, has been serving
customers since 17 May 2006 at a
central location inside the Saint Germain
en Laye RER commuter rail station in
France. The idea is to make it easy for
people to shop when returning from work
or a trip and thereby save time. Whether
they want a snack or a meal, customers
can find basic food items in the 62-sq.m
shop. But the real advantage is
the excellent service: customers
can leave a shopping list on their way
to work in the morning and return that
evening to find their order ready to go.
Cash & carry
and e-commerce
Q Cash & carry: a convenience
store for professionals, too
Q
E-commerce: Ooshop
and Boostore serve Internet users
Promocash, Carrefour’s cash & carry trade
name in France, helps local catering and
food service businesses to better serve their
own customers. Serving 140,000 business
customers, Promocash offers over 12,000
product listings with appropriate packaging.
With 134 stores (ranging from 1,500 to 4,000
sq.m) located throughout France,
Promocash is the leading cash & carry
network by number of sites. Since late 2005,
the banner has expanded its store network
through franchising. Carrefour also operates
20 cash & carry stores in Italy under the
Docks Market and Gross Iper trade names.
With sales of over 12 billion euros in 2006,
e-commerce rose nearly 40% in France, a
trend that will only grow in the coming years.
The Carrefour group operates two online
hypermarkets, Ooshop and Boostore:
• Ooshop is currently France’s leading
grocery cybermarket and ranks third
overall in online sales. With sites in Lyon,
Rouen, Evreux, Rennes, Le Mans, Nantes,
Bordeaux and Paris, Ooshop offers more
than 8,000 product listings, including
2,000 fresh and frozen items. In particular,
Ooshop boasts the largest selection
of fruits and vegetables on the Web.
• Boostore is the latest addition to the
Carrefour family. Launched in 2006,
it distinguishes itself from its older
counterpart, Ooshop, by exclusively
offering non-grocery products. This virtual
hypermarket offers CDs, books, DVDs,
stereo equipment, personal computers
or household appliances, all with
the Carrefour guarantee.
** Source: FEVAD, French Ministry of Commerce
and SMEs.
3,130*
convenience stores in Europe
1,541
Sherpa and Proxi superette
concession stores in France
24.1%
share of the convenience
store market in France
* Excl. concession stores.
027
2
Carrefour Group
8
The year 2006
16 Retail models
28 Strategy
“The coming battle will play out on every front: price, selection and services.”
Javier Campo,
Strategy: a close
relationship with
our customers
028
30
Price: a heightened offensive
32
Products: an enhanced offering
34
Loyalty programmes: more benefits for customers
36
Services: a growth engine
59 Financial Report
029
2
Carrefour Group
8
The year 2006
28 Strategy
16 Retail models
Price: a heightened
offensive
Our commitment
to low prices –
the core of our
strategy since 2005
– continued in 2006
in all our retail
banners and in
every country in
which the Carrefour
group operates.
030
In 2006, our consistent low-price policy
resulted in an improved price image
at our banners in a number of countries.
In particular, Carrefour hypermarkets made
significant strides in Argentina, France,
Poland and Indonesia. To reduce its impact
on profitability, the low price strategy
has been leveraged by three key strategies:
purchasing synergies, price positioning
and improved product presentation.
Q
Pooled purchasing
To ensure the best prices, we have
continued to expand our purchasing
synergies with Dia. Seven hundred Dia
products out of an average 1,200 product
listings in a hard discount store are now
purchased alongside store brand products
sold in the Group’s hypermarkets and
supermarkets.
Q
Aggressive positioning
Carrefour strives to be the price leader
throughout the world. To achieve that goal,
the Group is deploying an ongoing and
aggressive low-price policy by expanding its
in-store promotions and communications.
• The introduction of the “Ligne Alerte Prix”
(Price Hotline) in hypermarkets in France
in April 2006 reflects this commitment.
The hotline gives customers a key role
in competitive intelligence while providing
them with an opportunity to influence
prices. Carrefour is committed to lowering
its prices within 24 hours if a customer
identifies a lower price at a competitor’s
store.
• In 2006, Carrefour Argentina made
a strong impression on consumers with
a wide-ranging advertising campaign.
Launched on 23 February 2006,
the campaign helped to cement the
reputation of Carrefour hypermarkets
as a business committed to keeping prices
down. Throughout the country, Carrefour
promised the lowest prices on 800 basic
consumer goods and invited consumer
organizations to verify its claim.
• Italy’s GS slashed its prices during the year.
In a campaign similar to one conducted
in 2005, the supermarket network opted to
reduce prices by an average of 12%
on 2,500 products beginning in April 2006.
The initiative was strongly promoted by
a large-scale display advertising
campaign. From a strategic standpoint,
this price offensive is not a temporary
promotion but rather a long-term
repositioning.
Q
Improved product presentation
The new ready-to-sell approach to product
presentation now being deployed offers
two advantages: by showcasing products
in display units or in their original boxes
rather than stocking shelves with products
one by one, stores save significantly on time
and labour, resulting in lower costs and
lower prices for consumers. In the wake
of conclusive market testing in France,
Belgium, Taiwan and Colombia in 2006,
the concept will be introduced in other
countries in 2007.
59 Financial Report
Fuel: Carrefour
Italy – less
expensive than
oil companies
In 2006, Carrefour forcefully
asserted its leadership once
again with regard to fuel
prices. In Italy, where the sale
of petrol and diesel oil has
traditionally been dominated
by oil companies, the Group
continues to set itself apart
by building its own service
stations. Primarily operated
under the Carrefour name or
that of another Group brand,
the stations offer prices that
are four to seven euro cents
lower than those charged
by oil companies. Additional
discounts of 2.5 to 4 euro
cents are offered to PASS
card holders at the network’s
14 service stations.
031
2
Carrefour Group
8
The year 2006
28 Strategy
16 Retail models
Products: an expanded
offering
Since 2005, the
Carrefour group
has expanded
its product mix
and introduced
new products
with high-growth
potential. Our
banners have
focused on seeking
a balance
between grocery
and non-grocery
product ranges.
032
One of the Group’s strategies for energizing
sales growth is to offer a broad, high-quality
and innovative array of both grocery
and non-grocery products.
Grocery: own brands prove
an unqualified success
Q
Offering excellent value for the customer’s
money, the Group’s own brands met with
undeniable success in 2006, attracting an
ever more demanding clientele.
This success is not just a matter of price; it
can also be attributed to the consistent
quality of our products and ongoing efforts
to update the product mix worldwide. In
France, our product ranges were revamped
in 2005. In 2006, our assortments were
expanded, with 2,000 new product listings
sold under the Carrefour name. In particular,
two new product lines for children were
added: Carrefour Kids (ages 4-10) and
Carrefour Baby (infants up to age 2),
developed in cooperation with a
committee of paediatricians.
Champion expands
its product ranges
Q
In 2006, Champion supermarkets in France
expanded their selection of store-brand
products, with 850 new listings now available
in stores:
• Innovative fresh foods: mini fruits and
vegetables for children, microwavable
vegetables, and the first line of cholesterolfighting yoghurt launched as a store
brand.
• Sophisticated gourmet products: 100
premium-quality product listings under the
“Collection Champion” brand name are
now competing with upscale products
from the major brands.
• Environmentally and socially conscious
products, like the many eco-friendly
household cleaning products bearing the
Champion Eco Planète name.
Q Non-grocery: a rapidly
changing product mix
Q
Apparel: profiting from
popular trend-setting brands
The Group’s non-food strategy has also
changed. Market tests were conducted in
2006 and the initial results are persuasive.
Among the latest products:
• In France, Carrefour launched its first
ready-to-wear collection for men,
designed by Olivier Lapidus for the Tex
brand.
• In Argentina, Brazil and Colombia, a line of
housewares has been introduced under
the name “casa & deco”.
• In China, customer demand prompted
Carrefour to develop a range of cooking
utensils and tableware.
• And in Italy, Carrefour opened its first
pharmaceutical departments and
launched a line of health and beauty
products.
Carrefour plans to expand its clothing line in
order to offer fashionable and high-quality
designer collections. Two recent partnerships
illustrate this proactive policy:
• A cooperation agreement signed with
BCBG-Max Azria, an international leader
in women’s ready-to-wear clothing.
The Carrefour and BCBG-Max Azria teams
will take on the task of designing and
manufacturing high-fashion collections
for Carrefour hypermarkets in France,
Spain, Italy, Belgium, Portugal and Greece;
• An expanded collaboration with Disney to
produce new lines of apparel, household
goods and toys.
59 Financial Report
2,000
new product listings under
the Carrefour brand name in
France
1,300
additional products
(national brands and
own brands) in Champion
stores in France
1,000
new Carrefour brand
products in Italy
033
2
Carrefour Group
8
The year 2006
28 Strategy
16 Retail models
Loyalty programmes:
more benefits for customers
By learning more
about its customers
and strengthening
their ties to its retail
banners,
the Group can
anticipate their
needs more
effectively.
Q
Building closer customer relations
In all of the Group’s banners worldwide,
2006 was notable for the growing popularity
of customer loyalty programmes. Carrefour
in France and Spain, Dia in Spain, Champion
in France, GS in Italy and GB in Belgium:
the Group’s business units can now pool
their experiences and expertise and deploy
the latest tools for developing loyalty
programmes that reflect local challenges
and constraints and the maturity
of the market.
In 2006, Carrefour strengthened its appeal
among its loyal customers in France. Thanks
to its loyalty card, now carried by some
8.7 million customers, our hypermarkets
recorded an increase in both the average
customer purchase and the number
of customer visits.
034
France: The Carrefour Loyalty
Programme celebrates its
second anniversary
Q
On 15 May 2006, Carrefour celebrated
a highly symbolic anniversary: the second
year of its loyalty programme, which offers
a 5% discount year-round on 8,000 Carrefour
brand products. To express its appreciation
to its best customers, the banner developed
an exceptional promotional campaign:
a mailing sent to all cardholders, a radio
campaign, a special catalogue, anniversary
terminals and in-store displays. The purpose
of the campaign was to offer a 40%
reduction on 300 products over a 10-day
period. The campaign proved an enormous
success in Carrefour’s 218 hypermarkets in
France, which in two years have developed
the largest customer database
in the country’s retail sector.
59 Financial Report
A consumer club
to suit every taste!
To keep customers coming
back, GB in Belgium and
Champion in France have
introduced a new concept:
consumer clubs, which offer
even more advantages to
loyalty cardholders. Beauty
Club, Baby Club, Healthy Living
Club, Gourmet Club: every
customer can find a club
to suit his or her lifestyle
and needs. On the banners’
websites and in brochures,
club members receive practical
advice from experts and
exclusive offers in the form
of discounts on targeted
products.
Q Poland: Carrefour Polska unveils
its first supermarket loyalty card
Q
Taiwan: The Hao Kang
card on the inside track
Customers at 83 supermarkets in Poland
have been shopping with their “Rodziynka”
loyalty card since 8 November 2006. Each
time they check out, cardholders earn
points for the amount of their purchase –
points that can then be redeemed for gifts
or purchase vouchers. This free, easy-to-use
programme is backed by the Group’s
expertise and at the same time adapted
to local conditions. Polish families, who have
previously proven reluctant to join customer
loyalty programmes, have signed on
in large numbers.
Two million participating customers in 2006
with the potential for millions more: that’s
the boast of the new loyalty card launched
by Carrefour in Taiwan, which already offers
its customers joint Carrefour-Visa credit
cards. The principle behind the Hao Kang
Advantage Card is simple: cardholders earn
one credit point for every Taiwanese dollar
spent and, as always, earn extra points
when they buy Carrefour brand products.
And in Taiwan, customers receive their
discount in cash when they check out.
Simple and very enticing!
8.7
million
Carrefour loyalty cardholders
in France
6.3
million
Carrefour El Club loyalty
cardholders in Spain
5.6
million
Champion Iris cardholders
in France
035
2
Carrefour Group
8
The year 2006
28 Strategy
16 Retail models
Services:
a growth engine
Providing a powerful
tool for attracting
and retaining
customers, added
services such as
mobile telephone
offerings, financial
services and
insurance were
expanded
significantly in 2006.
036
Q
Carrefour becomes a mobile
virtual network operator in France…
Q
…and in several other
European countries as well
On 8 November 2006, following the example
of its sister unit in Belgium, Carrefour France
unveiled its new mobile phone service –
an economical, user-friendly, no-obligation
service that reflects Carrefour’s strong
commitment to its strategy of innovation
at every level for the ultimate benefit of
its customers. Featuring prepaid services,
a fixed pricing plan for both phone calls
and text messages and a reliable network,
Carrefour Mobile relies on a transparent
marketing campaign and a partnership
with the European operator Orange.
The service has also been offered in
65 Champion supermarkets since
December 2006 and will be extended
to every Champion store in 2007.
• In Belgium, six months after its launch in
February 2006, the prepaid “1 Mobile”
phone card has nearly 40,000 customers.
Sold in Carrefour and GB stores, the card
allows customers to “pay less and talk
more” thanks to a simple pricing plan.
• In Spain, Carrefour Móvil has joined forces
with Orange to make a noteworthy debut
in the mobile phone sector. Carrefour
is now the first retailer in Spain to provide
its customers with this service, which
is available in its 154 hypermarkets
and 82 Carrefour Express supermarkets.
• In Greece, 228 Carrefour, Champion
Marinopoulos and 5’ Marinopoulos stores
sell two prepaid phone packages in
partnership with Vodafone that live up
to the Group’s commitments regarding
quality and price.
59 Financial Report
Home computer
support
Fifty percent of French
households own a personal
computer, but many report
problems with installing,
using and repairing their
equipment. The solution?
Carrefour Micro-informatique
Assistance (Computer
Technical Support), available
since 8 November 2006,
in 86 hypermarkets in
southwest France and
the Paris metropolitan area.
Experts provide technical
assistance via telephone
from 8 a.m. to 10 p.m. seven
days a week or in customers’
homes from Monday through
Friday. Home training sessions
for up to five people can be
arranged upon request.
Q Champion Service Packages:
an array of synergies with Carrefour
Introduced in May 2006, the Champion
Service Packages are mainly comprised
of Group services and draw on the expertise
of Carrefour hypermarkets. They operate
as follows: in-store flyers offer a range
of different services to customers, available
via a special telephone number.
These packages include a portfolio
of 11 services in four different categories:
• Financial services, including the PASS card,
personal loans, life insurance and interestbearing savings accounts.
• Insurance coverage, including
homeowner’s and automotive insurance,
family protection and pet insurance.
• Travel services, including car rentals
in partnership with Avis.
• Practical information, including a care
hotline for disabled and elderly individuals.
This new service will both attract and retain
new customers.
037
2
Carrefour Group
8
The year 2006
16 Retail models
28 Strategy
“Our strength lies in rallying over 456,000 employees from many different nationalities
and backgrounds around a common goal and shared values.”
Jacques Beauchet,
Promoting
responsible
trade
038
40
Employees: Carrefour’s No.1 asset
42
Quality and ethical practices: a corporate commitment
44
Environment: act differently
61 Financial Report
039
2
Carrefour Group
8
The year 2006
16 Retail models
28 Strategy
Employees:
Carrefour’s No.1 asset
Carrefour owes
its strength to its
456,000 employees
and the ideas,
perspective and
experience they
provide. Through
its efforts to
enhance career
management,
expand the skills
of its workforce
and help workers
realize their
potential, the
Group is committed
to doing its utmost
to attract and
retain new
employees.
The Carrefour group:
a major employer
Q
As the world’s 11th largest private employer,
Carrefour is a significant economic force
and an influential employer on account
of its many trade names and wide variety
of store formats. It is the leading private
employer in France and Greece, the third
largest in Brazil and the fifth largest in
Colombia. Because 90% of its employees
work in direct contact with customers,
it is essential that they have the necessary
skills, motivation and ability to respond
to customer demands. For this reason,
the Group maintains a dynamic human
resources policy for recruiting, developing
and retaining staff. In 2006, the Group’s
Human Resources Department created
a special career management tool
to acquire a greater understanding
of Carrefour employees. The objective
is to eventually use this tool in all countries
within the Group’s scope of consolidation.
Q
Youth-oriented initiatives
The Carrefour group has consistently
provided young people with an important
gateway to the labour market. Every year,
Carrefour hypermarkets hire 8,000 new
employees, one-third of whom are under
040
26 years of age. Our first contact with
students is often decisive, insofar as 20%
of new hires join the Group after
an internship at Carrefour. Carrefour
hypermarkets have demonstrated their
desire to attract young people by creating
the Carrefour School to teach the basics
of the retail business; by signing the
Apprenticeship Charter, a commitment
to hire 1,500 apprentice workers by 2007;
and by offering special employment
contracts for students. Champion is also
a major national recruiter, hiring 3,500 young
people in France each year on a
permanent-contract basis. Champion
places special emphasis on the Internet
to create direct links with young people
through both its Web site and a “chat line”
that potential candidates can use to talk
directly with Human Resources managers.
Q
Customized training in each country
Carrefour maintains several training centres
around the world and organizes training
programmes in every country to support
employee development. Training provides
a means of fostering internal promotion,
the cornerstone of our human resources policy.
• Carrefour Polska created the Chopin
Academy to train a pool of future
hypermarket managers in Poland,
Carrefour Attitude:
a management tool
for fulfilling our values
61 Financial Report
Breakdown of workforce
by geographic area
68% Europe
16% Asia
The men and women who make up the
Carrefour group share seven core Values:
freedom, responsibility, sharing, respect, integrity,
solidarity and progress. To implement these
values on a daily basis, the Group in early 2005
launched Carrefour Attitude, a group
management and assessment tool that the
Executive Committee in each country can use
to conduct self-evaluations and improve
its relations with stakeholders. Carrefour Attitude
has been deployed in eight countries and will
eventually be expanded to the rest of the Group.
a high-growth country for the Group.
For six months, trainees alternate between
in-store training and classroom instruction
in functional skills.
• In Spain, 150 apprentices and future
employees at Carrefour’s “Parque
Mediterraneo” in Cartagena have taken
part in degree programmes ranging in
length from 140 to 250 hours, designed
to give them a better understanding
of the retail sector and their specific area
of concentration.
• In Turkey, Carrefour initiated a programme
to raise employee awareness of ethical
practices. A Code of Ethics was developed,
and training personnel in stores, head offices
and warehouses serve as liaisons to the
entire staff concerning ethical practices.
Q Respecting diversity:
a Carrefour commitment
By signing the Diversity Charter in October
2004, the Carrefour group made a strong
commitment to combat discrimination.
A number of new initiatives were undertaken
in 2006:
• In January 2006, Carrefour Hypermarkets
France renewed its pledge to France’s
national employment agency, the Agence
Nationale Pour l’Emploi (ANPE). Employee
hiring, orientation, promotion and
development have no connection
to national or ethnic origin, cultural
background or educational level. In this
spirit, as of March 2006 Carrefour doubled
its use of the hiring simulation method
developed in cooperation with ANPE.
One thousand assessments were
conducted using this method.
• In Spain, Carrefour signed a partnership
agreement with Madrid’s municipal
employment agency to encourage
the hiring of unemployed workers.
• Carrefour Poland demonstrated its
tangible commitment to its diversity policy
by finalizing an agreement with the
Warsaw branch of the Polish Association
for the Deaf to promote the employment
of people with disabilities in Carrefour
stores.
• In Brazil, the Group employs 659 disabled
workers. A Hiring Programme for People
with Disabilities has been developed as
part of a long-term initiative.
16% Latin America
456,295
employees worldwide
2,200
apprentices
hired by hypermarkets in France in 2006
7,333
disabled employees worldwide
041
2
Carrefour Group
8
The year 2006
16 Retail models
28 Strategy
Quality and ethical practices:
a corporate commitment
An aggressive
pricing policy
must not come
at the cost of safety,
quality or corporate
ethics.
Food safety: an absolute
requirement
Q
As a leading grocery retailer, the Carrefour
group maintains stringent policies when
it comes to food safety and quality.
Over 1,000 Carrefour employees define
and verify quality standards for every
product the Group sells. Each retail banner
has a warning management system
for taking protective measures at every
site within 24 hours.
Nutritional quality:
a day-to-day concern
Q
Today’s customers express a strong demand
for nutritional advice, a well-balanced diet
and healthy lifestyles. In this area, the Carrefour
group goes above and beyond the strict
requirements defined by law.
All new own-brand products are evaluated by
Carrefour customers before being placed on
store shelves. Each product
is once again submitted to a panel of
customers for their approval at intervals
of 18 months thereafter. Our Ed banner
requires that a balanced diet be available to
all its customers: the chain offers wellbalanced meals for four euros, an initiative
demonstrating that hard discount stores can
still provide quality nutrition. During Nutrition
042
Week, the Group’s banners offer a variety
of activities in the form of workshops and
partnerships. In Italy, the Group introduced the
first products in its new “in Forma” health food
product line in Italy; the line already extends
to some 80 products. And in Asia, Carrefour
Thailand conducted a large-scale
promotional campaign called “Eating better is
easy” in all its stores during April 2006.
Nutrition is also a major concern of the
Carrefour International Foundation, which
has lent its support to France’s EPODE
programme (Together Let’s Prevent Child
Obesity). The programme’s goal is to promote
a varied, balanced and enjoyable diet
along with regular exercise among the entire
population and particularly children ages
5 to 12, with backing from municipal
governments, teachers, health care
professionals and others. Carrefour
International Foundation has voiced
its support for expanding EPODE
across Europe.
Building lasting partnerships
with our suppliers
Q
Year after year, the Carrefour group strives
to develop partnerships with small
and medium-sized enterprises (SMEs)
in the countries in which it operates.
61 Financial Report
The Carrefour
group introduces
nutrition labels
on its products
Carrefour has unveiled
a major initiative aimed
at educating its customers
about nutrition by providing
an innovative array of
nutritional information on
all its products bearing the
Carrefour, Grand Jury and
Champion brand names.
The packaging includes six
colourful and easy-to-read
nutrition labels that provide
all the information customers
need in order to eat a
balanced diet. Recipes and
nutritional advice are provided
as well. Informative and
easy to understand, these
new labels will gradually be
introduced throughout Europe
and subsequently in Asia.
Eighty-five percent of the Group’s own brands
are currently manufactured by SMEs, and the
Group relies on anywhere from 4,000 to 15,000
suppliers in each country. Carrefour also
undertakes initiatives to support small
producers; two such programmes are
underway in Colombia and Brazil.
Q
Promoting human rights
The Carrefour group is committed to ensuring
compliance with the basic principles of human
rights, such as prohibiting child labour and
providing decent working conditions, both
within the Group and among its suppliers.
This commitment is reflected in a number
of steps taken by the Group:
• Implementation of a cooperative agreement
with the International Federation for Human
Rights, in force since 1997.
• The adoption of a supplier charter in 2000.
• The deployment of a methodology for
verifying compliance with this charter through
the performance of 1,460 supplier audits
since 2000.
• The signing of an agreement with the UNI
in 2001 and membership in the United Nations
Global Compact.
1,460
supplier
audits since 2000
1,048
quality control
employees in the Group
30,364
Carrefour Quality Line
producers worldwide
043
2
Carrefour Group
8
The year 2006
16 Retail models
28 Strategy
Environment:
act differently
The Carrefour group
focuses its
environmental
efforts on four major
areas: store design,
day-to-day store
operations, logistics,
and product
sourcing and
integrity.
Q
Sustainable construction
Designing environmentally friendly stores
is a challenge the Group plans to meet.
After successfully constructing a pilot store
in Saint-Maur des Fossés to High
Environmental Quality standards, Champion
has gone on to design additional stores
that incorporate eco-friendly features,
such as the Champion supermarket
in Toulouse and Bordeaux’s Bastide
supermarket. A hypermarket in Limbiate,
Italy, was built so as to blend harmoniously
into the surrounding environment.
The negative impact of the store’s
operations has been reduced and
an energy-savings policy adopted.
All of these features were incorporated
into the building’s design from a very
early stage.
Stores that are friendlier
to the environment
Q
• Energy efficiency
To reduce its energy consumption,
Carrefour measures usage during every
work shift while encouraging employees
to change their habits. It also takes steps
to improve energy efficiency through
enhanced controls, maintenance
and innovative technology. Each of
the Group’s hypermarkets in France
has deployed a Centralized Technical
Management system designed
to manage facilities effectively
and reduce energy consumption.
• Water management
French hypermarkets have pledged
to reduce their use of municipal water
and minimize wastewater pollution.
• Waste reduction
In most countries in which Carrefour
operates, employees and customers are
encouraged to adopt responsible waste
management behaviours on a daily
044
basis. Recycling bins for batteries and
electronic waste products are located in
each store. In addition, in each of its retail
banners Carrefour offers an alternative
to disposable bags at check-out in
most countries, and in some cases has
discontinued their use altogether.
Q
Sustainable logistics
The Group is developing alternative means
of transport in order to reduce its CO2
emissions by:
• giving priority to local suppliers and short
distribution channels;
• optimizing its logistics flows (to reduce the
frequency of lorry deliveries and loading);
• encouraging alternative means of
transport (combined rail-and-road or
barge-and- road transport) in France,
Spain, Italy, Romania and Poland;
• using less-polluting vehicles (meeting the
Euro 4 standard in Europe) and testing
alternative fuels, such as NGV and biofuel.
Q
Socially responsible product lines
Carrefour Quality Lines, responsible fishing,
timber policy: the Group is determined
to select quality products that protect
biodiversity and natural resources. For that
reason, Carrefour hypermarkets in France
and Belgium decided in April 2006
to discontinue their sales of teak furniture
as a means of fighting deforestation.
Carrefour now offers furniture made
from South American Amburana wood,
which meets Forest Stewardship Council
(FSC) standards. This decision reflects
the commitment the Group made in 1997
to preserve natural resources. In the same
spirit, hypermarkets in France have been
selling firewood bearing the PEFC and NF
labels. These labels indicate respectively
that the wood was taken from sustainably
managed French forests and that the level
of humidity is monitored to ensure cleaner
combustion.
61 Financial Report
Italy: Limbiate
blends
harmoniously
into the
landscape
In 2006, Carrefour Italy opened
a hypermarket in the town
of Limbiate, just outside
of Milan and near the
protected Le Groane park.
So as to blend effectively into
this environment, the store
was constructed with natural
materials (bricks, river pebbles,
wood) and offers green
spaces for visitors that include
sculptures intended for both
play and education. Other
highlights: the building’s roof
is designed to collect
rainwater, and its electricity is
supplied by a hydroelectric
plant in the Aoste Valley.
045
2
Carrefour Group
8
The year 2006
16 Retail models
28 Strategy
“Now our task is to accelerate our pace and remain focused on our objectives for growth.”
José Luis Duran,
Chairman of the Management Board
The outlook for
2008…
046
59 Financial Report
047
2
Carrefour Group
8
The year 2006
16 Retail models
28 Strategy
A time
to accelerate our pace
Carrefour has met
its first challenge
and succeeded
in propelling the
Group forward.
For 2007 and 2008,
our strategy remains
resolutely focused
on growth. Our
objective now is
to quicken the
pace at which
we move ahead.
048
Q
Accelerating our expansion
in growing markets
Q
Maintaining our determination
to keep prices low
The Carrefour group is determined to
capitalize fully on the position of strength
it has established in high-growth markets.
Accordingly, we increased the number
of store openings outside our four major
mature markets (France, Belgium, Spain
and Italy) by 60% between 2004 and 2006.
In 2007, this pace will be maintained.
We plan to open at least an additional
1.5 million sq.m of sales floor area, of which
two thirds will be outside our four major
European markets.
At the same time, we are investigating
new growth opportunities in such countries
as Russia and India. Moreover, the Group
plans to play an active role in the
consolidation of local markets when
conditions meet our operational
and financial criteria.
We are determined to continue
the low-price policy that has been in place
since 2005. Our objective is to remain
the unrivaled local price leader in every
market in which we operate. This strategy
has already borne fruit: in 2006, the Group’s
grocery market share made further gains
in France and its banners improved
their price image.
Q
Aligning our banners and
strengthening the Carrefour brand
Q
Upgrading our business model
for both food and non-food sales
After our successful experiments in Spain
and Brazil with new Carrefour Express and
Carrefour Bairro formats, in 2007 we plan
to expand our multi-format and singlebanner strategy to Turkey, Belgium,
Poland and Argentina.
We will continue to capitalize on strong
awareness of the Carrefour brand by
adding more store-brand products and
drawing on the Carrefour brand name to
accelerate our introduction of new services.
As we develop our sales model still further,
we must guarantee our customers better
product availability, a more pleasant
shopping experience and an expanded
offering tailored more effectively to their
needs. This approach should yield additional
opportunities to lower our prices and
increase our customers’ purchasing power.
With regard to non-food sales, partnerships
with recognized brands like Orange, Disney
and BCBG-Max Azria will play a key role in
efforts to enhance our business model.
59 Financial Report
Projected annual
opening of over
100
hypermarkets
worldwide
At least
1.5
million
new square metres per year
049
2
Carrefour Group
8
The year 2006
16 Retail models
28 Strategy
Corporate
Governance
050
59 Financial Report
52
The Supervisory Board
56
The Management Board and the Management Committee
051
2
Carrefour Group
8
The year 2006
16 Retail models
The Supervisory
28 Strategy
Board
The main prerogatives of the Supervisory Board are:
• The appointment and dismissal of members of the Management Board and its Chairman;
• The approval of any changes in the Group’s structures or in the structure of the share
capital.
The continuing role of the Supervisory Board is to verify and monitor the execution of corporate strategy. It can carry out
any verification procedures that it deems necessary at any time and obtain access to all documents that it considers
useful for such verifications. It must also verify the fairness and accuracy of the financial statements presented to it by the
Management Board. When this verification process has been completed, the Supervisory Board draws up a report which
is communicated to the shareholders during the Annual General Meeting.
Composition
of the Supervisory Board
Q
Composition of the Supervisory Board
Robert Halley*
José Luis Leal-Maldonado
Former Spanish Finance Minister and
former Chairman of the Spanish
Banking Association
Age 67
Chairman of the Supervisory Board
Age 71
Robert Halley joined Promodès
in 1961.
He was appointed General Manager
of the Management Board in 1972
and Vice-Chairman and Managing
Director in 1987.
Other appointments
Members of boards of Citra SA
Comet BV represented
by Bernard Bontoux
Representative of the Halley Family
Group, a core shareholder of Carrefour
Age 71
Bernard Bontoux was a lawyer from
1970 to 1983. He joined the Promodès
Group in 1983 as director of its legal
department, and was a member
of the Group’s general management
committee up until 1996. During
the same period he was chairman
of COCIL, a fund that manages
mandatory employer wage
contributions used for employee
housing.
Other appointments
Chairman of the Board of Directors
of Citra S.A., Member of the Boards
of SOPARIL and S.A.I.
José Luis Leal-Maldonado was
appointed Managing Director for
Economic Policy in Spain in 1977,
a position that he occupied until
February 1978, when he became
Secretary of State for Economic
Coordination and Planning. He was
appointed Spain’s Finance Minister
in April 1979, a position that he held
until September 1980. From 1981
to 1990, he worked as Economic
Advisor to the Banco de Vizcaya
and assistant to the chairman of
Banco Bilbao Vizcaya. From 1990
to 2006, he was Chairman of
the Spanish Banking Association.
Other appointments
Member of the Boards of Saint-Gobain,
Saint-Gobain Cristaleria Espanola,
CEPSA and Renault Spain.
Chairman of “Dialogo,” a SpanishFrench friendship association and
of Accion Contra el Hambre, ViceChairman of the Fundación Abril
Martorell and member of the Real
Patronato del Museo del Prado and
of the Fundación Duques de Soria.
René Brillet
Former Carrefour General Manager
for Asia
Age 66
René Brillet began his career as a radio
officer in the Merchant Marine in 1968.
In 1972 he joined Carrefour and
successively held the positions of Chief
Accountant in Italy and Brazil, then
052
of Store Manager and Director of
Organization and Methods while still
in Brazil. In 1981, he moved to Argentina
as Executive Director and then
to Spain, where he was in charge
of operations from 1982 to 1985,
and finally to France, which he
managed from 1986 to 1995. In 1996
he was appointed General Manager
for Europe and then General Manager
for Asia in 1998, a position that he held
until 28 February 2004.
Anne-Claire Taittinger
Senior Adviser to WEFCOS (Women’s
Forum for the Economy and Society)
Age 56
Anne-Claire Taittinger is a graduate of
the Institut d’Études Politiques de Paris,
and holds a Master’s degree in urban
sociology and an advanced degree in
urban development from the Centre
de Perfectionnement aux Affaires. She
began her career in 1976 at the Caisse
des Dépôts et Consignations as head
of urban development operations at
the Société Centrale d’Équipement du
Territoire. She joined the Louvre group
in 1979 as General Secretary and then
became Chairman and Managing
Director of the Compagnie Financière
Deville. She was successively Chairman
and Managing Director of the
Compagnie Financière Leblanc and
of ELM-Leblanc, Vice-Chairman and
Managing Director of the Industrial
Division of Deville, Chairman and
Managing Director of Parfums Annick
Goutal France USA and then of
Baccarat. She became General
Manager and subsequently Chairman
of the Executive Committee of the
Société du Louvre in 1997, and then
in 2002 Chairman of the Executive
Committee of the Taittinger Group
as well as General Manager
of its subsidiary, the Louvre group,
in conjunction with the separation
of functions of Chairman of the Board
and General Manager. She left these
positions in July 2006 upon a change
in the shareholder base at the
Taittinger Group.
of the Paribas Bank, in charge of equity
holdings and industrial affairs and then
as Manager of the Equity Holdings
Division of the BNP-Paribas Bank. He
has been Chairman of PAI partners
since 1998.
Other appointments
Other appointments
Member of the Boards of Dexia,
Club Méditerranée and Baccarat.
Member of the Boards of Eiffage,
Groupe Bruxelles Lambert (GBL),
Publicis, Gras Savoye, Groupe Industriel
Marcel-Dassault, Power Corporation
of Canada and Pargesa Holding S.A.
René Abate
Consultant
Age 58
René Abate is a graduate of the École
Nationale des Ponts et Chaussées and
the Harvard Business School. He began
his career as an engineer with the
New York Port Authority in 1970 and
then joined BCG in 1974 where he was
a consultant in the fields of strategy
and organization to large companies
in various sectors, notably in high
turnover consumer goods and in
food and specialty retailing. He was
successively Cabinet Business Manager
in France, Chairman of the Group
for Europe and member of the World
Executive Committee, positions
from which he resigned in 2006.
Other appointments
Assistant Manager of Delphen SARL.
Member of the Management Board
of the École Nationale des Ponts
et Chaussées.
and Vice-President of the Association
l’Envol pour les Enfants Européens.
of the Laboratoire Français du
Fractionnement et des Biotechnologies.
Amaury de Sèze
Chairman of the Supervisory Board
of PAI partners
Age 60
Amaury de Sèze began his career in
1968 at Bull General Electric. In 1978 he
joined the Volvo group where he held
the positions of General Manager,
Chairman and Managing Director of
Volvo France, Chairman of Volvo
Corporate Europe, member of the
Executive Committee of the Volvo
Group and member of the Renault
Volvo Strategic Committee. He joined
the Paribas group in 1993 as a member
of the Management Board of the
Compagnie Financière de Paribas and
Jean-Martin Folz*
Age 60
A graduate of the École Polytechnique
and the École des Mines, Jean-Martin
Folz began his career in 1972 in a
regional office of the French Ministry of
Industry, after spending a year in Tokyo
at the Maison Franco-Japonaise.
Between 1975 and 1978 he belonged
to various ministerial staffs and was
ultimately appointed Chief of Staff to
the Secretary of State for Industry. In
1978 he joined the Rhône-Poulenc
group, first as Plant Manager of the
Saint Fons unit and then later as
Deputy General Manager of the
Rhône-Poulenc Specialty Chemicals
Division. Between 1984 and 1987 he
was Deputy Managing Director and
subsequently CEO of Jeumont
Schneider. He was appointed COO of
Péchiney in July 1987 and then
Chairman of Carbonne Lorraine. In
1991 Mr. Folz was appointed CEO of
Eridania Béghin Say and Chairman of
Béghin Say. He joined the PSA Peugeot
Citroën group in July 1995 and was
appointed Director of the Automotive
Division in April 1996. He was named
Chairman of the PSA Peugeot Citroën
Group as of October 1, 1997. On that
same date he was also appointed
Chairman of Automobiles Peugeot
and Automobiles Citroën. He resigned
from these positions in 2007.
59 Financial Report
Sébastien Bazin*
Age 45
From 1990 to 1994, Sébastien Bazin was
Deputy Director of Hottinguer Rivaud
Finances in Paris. Between 1994 and
1997, he served as Group Managing
Director and General Manager of
Immobilière Hôtelière SA. From 1997 to
1999 he was CEO of Colony Capital
SAS. Since 1999 he has been Executive
Managing Director of Colony Europe.
Other appointments
and Chief Executive Officer of Lucia
SA.
Chairman of the Board of Directors of
Château Lascombes.
Member of the Supervisory Board of
ANF and Director of the Groupe Lucien
Barrière and Accor SA.
and Chief Executive Officer of
the Société d’Exploitation Sports
et Evènements and of Holding Sports
et Evènements.
Nicolas Bazire*
Age 49
Nicolas Bazire was an Auditor and later
Conseiller référendaire at France’s
Cour des Comptes. In 1993 he became
Chief of Staff to French Prime Minister
Edouard Balladur. He served as a
Managing Partner in Rothschild & Cie
Banque between 1995 and 1999, when
he was appointed to the Supervisory
Board. In 1999 he became CEO of
Groupe Arnault SAS and Director of
Development and Acquisitions at
LVMH – Moët Hennessy Louis Vuitton.
Other appointments
Member of the Board of LVMH – Moët
Hennessy Louis Vuitton.
Member of the Supervisory Board of
Rothschild & Cie Banque SCS France.
Member of the Board of IPSOS.
Other appointments
Member of the Boards of Saint Gobain
and Solvay (Belgium).
Halley Participations*
Representative of the Halley Family
Group, a core shareholder of Carrefour
* The appointment of Robert Halley as Member
of the Supervisory Board is subject to ratification
by the shareholders at the Annual Meeting.
The appointments of Jean-Martin Folz, Halley
Participations, Sébastien Bazin and Nicolas Bazire
are subject to the approval of the shareholders
at the Annual Meeting.
053
2
Carrefour Group
8
The year 2006
16 Retail models
The Committees
of the Supervisory
28 Strategy
Board
There are two specialized committees within the Supervisory Board.
The purpose of these committees is to examine certain specific issues
in depth and make proposals to the Supervisory Board.
Q
The Audit Committee
Missions of the Committee
The prerogatives of the Audit Committee
include responsibility for:
Annual and interim financial statements,
for which:
• it examines the corporate and
consolidated financial statements before
they are presented to the Supervisory
Board;
• it verifies that proper and consistent
accounting methods are used to draw up
the corporate and consolidated financial
statements;
• it analyzes the intermediate and
preliminary results and the commentaries
on them before they are made public;
• it verifies that the internal procedures for
collecting and auditing the information
ensure that the aforementioned
accounting methods can be correctly
applied;
• it considers changes and adaptations
of the accounting principles and rules
used to draw up the financial statements.
054
Stock market regulations, for which:
• it assures the quality of the procedures
and information relating to stock market
regulations (reference document).
The internal and external audit
of the company and its main subsidiaries,
for which:
• it evaluates proposals for the nomination
or renewal of the company’s Statutory
Auditors and their compensation;
• it evaluates, with those responsible for
internal control, the Group’s internal
control systems.
The risks that it examines regularly with
the Supervisory Board are of a financial,
strategic or operational nature.
The committee can make use of the
information available from the Group’s
Finance and Management Director
and can hear the Statutory Auditors under
conditions stipulated by the Committee.
Membership of the Committee
The committee has a maximum
of four members appointed
by the Supervisory Board from
amongst its members.
Current committee members are:
• Robert Halley (Chairman);
• René Brillet (independent member);
• Amaury de Sèze (independent
member).
The Committee meets at least three
times per year. Two meetings are
scheduled before the presentation
of the annual and interim financial
statements. The Committee is not
quorate unless at least half its members
are present. A committee member
may not appoint a proxy.
The Committee on
Remuneration, Appointments
and Corporate Governance
Q
Missions of the Committee
The Committee intervenes in the
following areas:
• Proposals to the Supervisory Board
for the nomination of its members.
• Proposals for the remuneration
of corporate officers and the
distribution of director’s fees.
• Assessment of the overall
stock-option package.
• Information on the nomination
and remuneration of the Group’s
senior management.
• Evaluation of the quality of the work
of the Supervisory Board.
59 Financial Report
Membership of the Committee
The committee has a maximum
of four members appointed by
the Supervisory Board from amongst
its members.
Current committee members are:
• José Luis Leal-Maldonado (Chairman
and independent member);
• Anne-Claire Taittinger (independent
member);
• René Abate (independent member).
The Committee meets at least once
a year. It can meet at the request
of the Chairman of the Supervisory
Board or of two members of the
Committee. The Committee is not
quorate unless at least half its
members are present. A committee
member may not appoint a proxy.
055
2
Carrefour Group
The
8
The year 2006
16 Retail models
28 Strategy
Management Board
The Management Board, an executive body appointed by the Supervisory Board,
is responsible for the General Management of the company through a collective
decision-making process. It examines and approves the financial statements and calls
the Shareholders’ Meeting. It reports on its management decisions to the Supervisory Board.
José Luis Duran
Chairman of the Management Board
Age 42
After studying economics, José Luis
Duran began his career in 1987
at Arthur Andersen. He joined Pryca
(a Carrefour subsidiary) in 1991, where
he successively held the positions
of Management Auditor (1991-1994),
Management Auditor - Southern
Europe (1994-1996) and then
Management Auditor - Americas
Region until 1997. After holding
the position of Chief Financial Officer
at Pryca, he became Chief Financial
Officer of Carrefour Spain in 1999.
In April 2001 he was appointed
CFO and Managing Director of
Q
056
Organization and Systems for Carrefour
and joined the group’s Executive
Committee. On 3 February 2005,
José Luis Duran was named Managing
Director and Chief Executive Officer
of the Group. On 20 April 2005
he was appointed Chairman
of the Management Board.
Jacques Beauchet
Age 55
After completing his studies at the
European School of Management
in Paris (ESCP), Jacques Beauchet
began his career in 1977 in
management control at Shell. In 1986,
he joined Codec as Management
From left to right: Javier Campo, Guy Yraeta, José Luis Duran, José Maria Folache and Jacques Beauchet.
Control Director until 1989, when
he became General Secretary. At the
end of 1990, he was appointed acting
Finance Director of Promodès. In 1993,
he became Adviser to the Chairman,
a post which he held concurrently
with that of Communications Director
from 1995. In 1999, he was named
the Carrefour group’s Human
Resources Director. Since 3 February
2005, Jacques Beauchet has been
Managing Director for Human
Resources, Communications and
General Secretary. On 20 April 2005,
he was appointed to membership of
the Management Board. The following
divisions report to him directly: Human
Resources, Communications, Legal,
Quality and Risks, International
Partnerships and Convenience France.
59 Financial Report
Javier Campo
José Maria Folache
Guy Yraeta
Age 52
Age 47
Age 54
After studying engineering at the
Universidad Politécnica in Madrid,
Javier Campo began his professional
career in 1979 at the Accenture
consulting firm. In 1982, he became
General Manager of the Alton and
Old Chap jean brands. He joined the
Group in 1985 as Marketing Director
of Dia. In 1986, he was appointed
General Manager of Dia Spain, then
General Manager of Dia International.
In 1996, he became a member of the
Executive Committee of the Promodès
group and then of the Carrefour group
in 1999. On 20 April 2005, he was
appointed to membership of the
Management Board. The following
divisions report to him directly:
Dia; Food Sales; and Organization,
Systems and Supply Chain.
After obtaining a law degree and
an MBE from the IESE business school
in Barcelona, José Maria Folache
joined Continente in 1986 as Deputy
HTCG Purchasing Director in the
Merchandise department in Spain.
In 1991, he was the Manager of
a hypermarket for one year, and
then returned to the Merchandise
Department in Spain as Sales Director.
In 1993, he was appointed Regional
Director, and then in 1994, Director
of non-food central purchasing for
the Promodès group. In 1998 he was
appointed General Manager
for Promodès Hypermarkets in Italy
and in 2000 General Director, Spain.
Since 3 February 2005, José Maria
Folache has been Managing Director
of the Europe region (excluding
France). On 20 April 2005 he was
Management Board. The following
divisions report to him directly: Italy,
Spain, Belgium, Other European
countries and Non-Grocery Sales.
After completing his engineering
studies at the Institut Supérieur
d’Agriculture in the Rhône-Alpes
region, Guy Yraeta joined Carrefour
in 1976. In 1988 he was appointed
Store Manager and two years later,
he took up the post of Grocery
Director for France. In 1994 he became
Regional Director for the Central
Northeast territory. Beginning in 1995,
he held the post of Executive Director
for Italy for four years. In 1999 he was
named Executive Director for Poland,
and in 2003 he was named Director
for the APE (Other European countries)
zone. He became Executive Director
for French hypermarkets in 2004, and
since 3 February 2005 has served as
Managing Director for Hypermarkets
in France. On 20 April 2005, he was
Management Board.
The Management
Committee
The Management Committee is responsible for the Group’s operational management.
It is composed of members of the Management Board and directors of operating
and functional divisions who report directly to the Management Board, either to
its Chairman or to one of its members. The Management Committee is composed of:
Q Members of the
Management Board
Supermarkets France
Thierry Garnier
José Luis Duran
Jacques Beauchet
Javier Campo
José Maria Folache
Guy Yraeta
China
Éric Legros
Q
Operating divisions
Belgium
Marc Oursin
Dia Europe
Javier de la Peña
Q
Functional divisions
Human Resources
Hervé Clec’h
Grocery Sales
Juan Cubillo
Non-Grocery Sales
Christophe Geoffroy
Italy
Giuseppe Brambilla
Spain
Gilles Petit
Organization, Systems
and Supply Chain
Gérard Lavinay
Dia Spain
Ricardo Curras
Other Asian countries
Noël Prioux
Finance Management
Éric Reiss
Convenience and Cash & Carry
Gérard Dorey
Other European countries
Gilles Roudy
Russia
Didier Fleury
Latin America
Éric Uzan
057
2
058
Carrefour Group
8
The year 2006
16 Retail models
28 Strategy
FINANCIAL
REPORT
61
61
Management Report
CONSOLIDATED
FINANCIAL
STATEMENTS
70
Consolidated Financial Statements
76
Notes on the Consolidated Financial Statements
115
Statutory auditors’ report
116
LSF REPORT – 2006
129
TOTAL STORES
133
COMMERCIAL STATISTICS
135
ADDRESSES OF PRINCIPAL SUBSIDIARIES
59
61
61
Management Report
70
In the pages that follow, the Carrefour Group Financial Report presents the Group’s results for the three fiscal years 2004, 2005
and 2006.
It comprises the following:
60
Q
the Group Management Report presents the activity and main figures for 2006, for the Group in its entirety and for each of the
geographical operating regions: France, Europe (excluding France), Latin America and Asia. It ends by focusing on recent
developments and the Group’s 2007 objectives, as presented at the time of the publication of the consolidated earnings on
8 March 2007;
Q
the Consolidated Financial Statements and the Notes to the Consolidated Financial Statements present all summary statements
and comments on the Group’s financial situation, including both the parent company and its subsidiaries;
Q
the Management Report;
Q
the text of the proposed resolutions that will be submitted to the shareholders for approval, during the Shareholders’ Meeting
convened on 20 April 2007 and to be reconvened on 30 April 2007 if a quorum is not present at the first meeting;
Q
the report by the Chairman of the Supervisory Board on corporate governance and internal control procedures;
Q
and finally, the store network and commercial statistics summarizing ten years’ worth of trends in the number of consolidated
stores in each country and sundry statistics, in particular as regards sales areas and the number of branded stores.
76
115
Consolidated
Financial Statements
MANAGEMENT REPORT
ACCOUNTING PRINCIPLES
The Carrefour Group consolidated financial statements for the
fiscal year 2006 have been drawn up in accordance with IAS/
IFRS international accounting standards.
The following are presented for prior periods: the Income
Statement as of 31 December 2004 restated in accordance
with IFRS 5 (Non-current Assets Held for Sale and Discontinued
Operations) for operations discontinued in 2005 and 2006, as
well as the Income Statement as of 31 December 2005,
restated for operations discontinued in 2006.
The Group decided in 2005 to make a change in the estimate
of its buildings depreciation period, raising it from 20 to 40
years. In 2004, the depreciation allowances presented in the
tables below are still stated over 20 years.
ACTIVITY – RESULTS
By focusing on the two main priorities of our strategy – customers
and profit growth – we reached our objectives in 2006:
Q
Q
Q
net sales increased by 6.6% at current exchange rates
and by 6.4% at constant exchange rates (an increase
of over two points compared with growth rates recorded
in 2005 and 2004);
growth in our grocery market share was posted for the
second consecutive year in france (up 0.5% according to
TNS Worldpanel);
we created 1.4 million sq.m of sales area by opening nearly
1,000 retail outlets, including 103 hypermarkets (more than
double the store openings completed in 2004).
Q
Annual figures
% Var.
2006/2005
2006
2005
77,901
73,060
6.6%
69,113
3,258
3,152
3.4%
3,190
operations - Group share
1,857
1,798
3.3%
1,733
412
(362)
-
(142)
2,269
1,436
Net sales
Net income from
discontinued operations
- Group share
Net income - Group share
58.0%
2004
1,591
We continued to implement the major components of our
strategy:
Q
we are strengthening our promotions and low pricing policy
in a European context that continues to be characterized by
both weak growth in grocery consumption and deflation;
Q
we are constantly expanding our product lines and
services;
Q
we are strengthening the potency and public recognition
of our brand in all countries in which we operate.
61
61
Q
61
Management Report
70
ACTIVITY CONTRIBUTION
Net sales
2006
2005
(in millions
of euros)
% Var.
2006/2005
at con% Var.
stant exchange
rates
2004
2006 at
constant
exchange
rates
2006
2005
(in millions
of euros)
% Var.
2006/2005
at con% Var.
stant exchange
rates
2004
Dec.
2006 at
constant
exchange
rates
France
37,212
35,577
4.6%
4.6%
35,167
37,212
France
1,718
1,713
0.3%
0.3%
1,964
1,718
Europe
(excl.
France)
29,850
28,102
6.2%
6.7%
26,404
29,993
Europe
(excl.
France)
1,208
1,145
5.5%
5.7%
968
1,210
Latin
America
5,928
5,075
16.8%
12.5%
3,938
5,710
Latin
America
161
133
21.8%
15.2%
88
153
Asia
4,911
4,306
14.0%
12.4%
3,603
4,838
Asia
171
162
5.4%
3.8%
170
169
77,901
73,060
6.6%
6.4%
69,113
77,753
3,258
3,152
3.4%
3.1%
3,190
3,249
Total
Net sales amounted to 77,901 million euros, up 6.4% compared
with 2005 sales at constant exchange rates. After the positive
impact of exchange rates, sales increased by 6.6%.
Q
Breakdown of net sales
by business
Total
Activity contribution amounted to 3,258 million euros and
represented 4.2% of our sales as against 4.3% in 2005. It increased
by 3.4% compared to 2005.
Q
Breakdown of activity contribution
by geographic region
In %
2006
2005
2004
In %
2006
2005
2004
France
52.7%
54.3%
61.6%
Hypermarkets
58.9%
58.0%
59.1%
Europe (excl. France)
37.0%
36.3%
30.3%
Supermarkets
17.4%
18.1%
17.7%
Latin America
5.0%
4.2%
2.8%
9.1%
8.8%
8.4%
Asia
5.3%
5.2%
5.3%
Other
14.6%
15.1%
14.8%
Total
100.0%
100.0%
100.0%
Total
100.0%
100.0%
100.0%
Hard Discount stores
DEPRECIATION AND PROVISIONS
Q
In %
2006
2005
2004
France
47.8%
48.7%
50.9%
38.3%
38.5%
38.2%
Latin America
7.6%
6.9%
5.7%
Asia
6.3%
5.9%
5.2%
100.0%
100.0%
100.0%
Total
62
Depreciation and provisions totalled 1,587 million euros,
representing 2.0% of sales.
Breakdown of net sales
NON-CURRENT INCOME AND EXPENSES
Non-current income and expenses represented net income
of 16 million euros. This included:
Q
costs of restructuring or closing sites in the amount of
98 million euros;
Q
an expense of 69 million euros relating to stock options;
Q
asset depreciation in the amount of 26 million euros;
Q
capital gains or losses from sales representing income of
211 million euros (mainly from sales of shopping malls in Italy,
Poland and France);
Q
other non-recurring items totalling 2 million euros.
76
115
EBIT
EBIT amounted to 3,274 million euros and represented 4.2% of
our sales as against 4.3% in 2005. It increased by 4.6%
compared to 2005.
Q
This line amounted to 1,857 million euros, up 3.3% compared
with net income from recurring operations - Group share 2005,
which stood at 1,798 million euros.
NET INCOME FROM DISCONTINUED OPERATIONS GROUP SHARE
EBIT
In %
NET INCOME FROM RECURRING OPERATIONS GROUP SHARE
2006
2005
2004
This line represented income of 412 million euros in the 2006
Income Statement and breaks down as follows:
France
50.1%
50.7%
62.4%
40.3%
40.1%
32.7%
Income from sale of Korea
Latin America
4.9%
4.3%
(0.3%)
Asia
4.7%
4.9%
5.2%
100.0%
100.0%
100.0%
Total
FINANCIAL INCOME (EXPENSE)
Interest amounted to a net expense of 480 million euros, down
by 6.6% on 2005 and representing 0.6% of sales as in 2005. The
increase in interest expense this year is primarily explained by
the rise in interest rates and the increase in the group’s average
amount of financial debt.
Thus, despite the growth in Activity Contribution before
depreciation and reserves coverage of financial expenses
rose from 10.2 x in 2005 to 10.1 x in 2006.
Income from sale of Puntocash
Expense from Slovakia
430
17
(15)
Expense from sale of supermarkets in China
(9)
Expense from Champion supermarkets
(7)
Operating expense from closed Brazilian supermarkets
(6)
Expense from sale in the Czech Republic
(1)
Income from Supeco
1
Income from sale of Food service
1
Total
412
INCOME TAX
The effective income tax expense was 810 million euros in 2006.
This represented 29.0% of income before taxes as against 29.3%
in 2005. This slight reduction in the effective tax rate can be
explained by the slight drop in taxation rates in France and by
improved performance in Poland and Belgium, where the
results were not taxed in view of deferred losses.
Q
On 26 September 2006, the Group sold its subsidiary in South
Korea to E-Land for the sum of 1.5 billion euros. Income from
the sale was reported in “Net income from discontinued
operations” in accordance with IFRS 5.
Q
CONSOLIDATION BY THE EQUITY METHOD
Income from equity affiliates fell slightly to 36 million euros
(15 million euros less than in 2005). This trend was primarily due
to the full consolidation of Hyparlo.
Withdrawal from South Korea
Sale of Puntocash
On 21 May 2006, after obtaining the consent of the competition
authorities, Carrefour disposed of its Cash & Carry subsidiary
in Spain to the Miquel Alimentacio group.
MINORITY INTERESTS
The share of minority interests in income rose from 7.7% in 2005
to 8.1% in 2006 (not including income from discontinued
operations). Minority interests were up by more than 9%
(or 14 million euros), due to the growth of earnings generated
by subsidiaries in such countries as China and Greece.
63
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Withdrawal from Slovakia and the Czech Republic
On 30 September 2005 Carrefour announced its intent to
acquire Tesco Taiwan and to transfer its operations in the
Czech Republic and Slovakia to Tesco. Carrefour desired to sell
its 11 hypermarkets in the Czech Republic and its four
hypermarkets in Slovakia to Tesco.
On 21 January 2006, the European Union approved the
transaction in the Czech Republic, but referred the decision
on Slovakia to the Slovak authorities.
On 31 May 2006, Carrefour and Tesco finalized the transaction
concerning Carrefour’s withdrawal from the Czech Republic
and the acquisition of Tesco’s business in Taiwan.
On 29 December 2006, the Slovak authorities announced
their opposition to the sale for reasons of competition.
The Group is currently studying various withdrawal scenarios
for fiscal year 2007.
Q
70
France
The consolidated store network in France at 31 December
2006 stood as follows:
2006
Hypermarkets
192
Supermarkets
615
811
Other stores
101
Total
1,719
In 2006, the network expanded by 13 hypermarkets,
20 supermarkets, and by 29 hard discount stores, and
decreased by 7 Cash and Carry stores.
Net sales
CASH FLOW AND INVESTMENTS
Cash flow stood at 3,586 million euros, stable compared with
2005. Cash flow was impacted in 2006 by non-recurring items
related to the restructuring of certain operations which had
been recorded as payables in 2005. Examples include the final
closing or the disposal of stores in Spain and Brazil, as well as
the programme designed to optimize logistics and central
services in France. We estimate that operating cash flow from
continuing operations, excluding these non-recurring items,
would have increased by 4% over the period, closer to the
growth in EBIT before depreciation and amortization. It
represented 56.8% of net debt in 2006 versus 52.7% in 2005.
35,577
37,212
2005
2006
Net investments for the year amounted to 1,885 million euros,
as against 2,425 million euros in 2005.
1,713
1,718
2005
2006
The Group’s tangible and intangible investments amounted
to 3,368 million euros.
Financial investments for 2006 represented 594 million euros.
Divestments that impacted our cash flow in 2006 amounted
to 2,078 million euros.
SHAREHOLDER’S EQUITY
This amounted to 10,503 million euros at 31 December 2006
as against 9,386 million euros the preceding year.
NET DEBT
The Group’s net debt decreased from 6,790 million euros at the
end of 2005 to 6,309 million euros at the end of 2006. At the end
of 2006, net debt represented 60% of the net position before
distribution of dividends, as against 72% at the end of 2005.
64
Sales in France increased by 4.6%. The activity contribution
decreased slightly from 4.8% of sales in 2005 to 4.6% of sales in
2006, amounting to 1,718 million euros. The growth of EBIT was
less rapid than sales growth, primarily due to costs related to
increased staff on the sales floor, the development of services
and the expansion of product offerings.
Operational investments in France totalled 1,095 million euros,
76
Q
115
Europe (excluding France)
Q
The consolidated store network in Europe at 31 December
2006 stood as follows:
Latin America
The consolidated store networ k in Latin Amer ica at
31 December 2006 stood as follows:
2006
2006
Hypermarkets
365
Hypermarkets
204
Supermarkets
746
Supermarkets
118
539
2,969
Other stores
241
Total
4,321
The consolidated networ k expanded this year by
44 hypermarkets, 180 hard discount stores, 17 convenience
stores and 1 Cash and Carry store, and decreased by
19 supermarkets.
Other stores
-
Total
861
In 2006, the network expanded by 19 hard discount stores and
56 hypermarkets while the number of supermarkets fell by
31 stores. This trend was primarily due to the 34 supermarkets
in Brazil that were converted to a new format comparable to
the Carrefour Express stores launched in Spain.
Net sales
Net sales
28,102
2005
29,850
5,075
5,928
2005
2006
2006
1,145
2005
1,208
133
161
2005
2006
2006
Sales in Europe increased by 6.2%, thanks to very good results
in the main European countries. The activity contribution
amounted to 4.0% of sales at 31 December 2006 as against
4.1% in 2005. EBIT rose slightly less than sales, by 5.5%. This trend
can be attributed primarily to a smaller contribution from Italy,
where the macro-economic environment and difficult
competitive conditions weighed on the results. Excluding Italy,
EBIT from the Europe Zone increased by 8%. We were
particularly satisfied with the performance of countries such
as Belgium, Greece and Poland, which posted double-digit
EBIT growth.
Sales increased by 16.8% from 2005 to 2006, strongly affected
by exchange rate fluctuations. At constant exchange rates,
sales increased by 12.5%. Activity contribution increased
from 2.6% of sales in 2005 to 2.7% of sales in 2006, standing at
161 million euros. This performance can be explained by an
increased margin on continuing operations, which reflects the
turnaround in Argentina where market conditions returned to
normal, and by the effectiveness of our sales strategy in
hypermarkets in Brazil, as well as by the results of our stores
converted to the Carrefour Bairro trade name.
Operational investments in Europe totalled 1,529 million euros,
Operational investments totalled 436 million euros, representing
7.4% of sales.
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70
RECENT CHANGES
Asia
The consolidated store network in Asia at 31 December 2006
stood as follows:
2006
Hypermarkets
202
Supermarkets
-
255
Other stores
-
Total
457
In 2006, the network expanded by 11 hypermarkets and
30 hard discount stores, while the number of supermarkets
decreased by 8, as a result of the withdrawal from supermarkets
in China.
Net sales
On 1 December 2006, the Group signed a memorandum
of agreement concerning the acquisition of Ahold Polska
for a price of 1375 million. This transaction is still subject to
approval by the relevant authorities.
Ahold Polska currently operates 194 stores, including
15 Hypernova hypermarkets, with the rest being Albert
supermarkets, having a total combined surface area of
180,000 sq.m. Ahold Polska generated 2005 gross sales of
1591 million. This transaction will position Carrefour Polska
in second place among the country’s grocery retailers.
This acquisition represents a new stage in the Carrefour group’s
strategy, which consists in building leadership positions in
all markets in which it has chosen to operate, and particularly
in countries with high growth potential. It is in keeping with
the ongoing policy of organic growth carried out by the Group
since 2005. Carrefour Polska generated gross sales of
1,359 million euros in 2006, and included 42 hypermarkets and
83 supermarkets as of 31 December 2006, with a total
combined surface area of nearly 416,000 sq.m.
4,306
4,911
OBJECTIVES
The Group has set the following objectives for 2007:
2005
Under current competitive conditions, we foresee 2007 sales
growth, at constant exchange rates, higher than or equal
to 2006 growth. The achievement of this objective will involve
a certain amount of tactical acquisitions.
Q
Growth in activity contribution will be less than sales growth,
which is a direct consequence of our determination
to consolidate our leadership position through low prices
and the continuation of our expansion policy.
2006
162
171
2005
2006
Sales in Asia increased by 14.0%. At constant exchange rates,
sales grew by 12.4%. This trend reflects the accelerated rate
of store openings. Activity contribution decreased from 3.8%
of sales in 2005 to 3.5% of sales in 2006, amounting to 171 million
euros.
Operational investments in Asia totalled 309 million euros,
66
Q
76
115
RISK MANAGEMENT
FINANCIAL RISKS
Q
Foreign exchange risk
The Group’s operations throughout the world are performed
by subsidiaries operating primarily in their own countries
(with purchasing and sales in local currencies). As a result,
the Group’s exposure to exchange rate risk in commercial
operations is naturally limited.
It mainly involves imports. The risk related to fixed import
transactions is hedged by forward currency purchases.
Investments planned in foreign countries are sometimes
covered by options.
Local financing operations are generally conducted in the
local currency.
The maturity of foreign exchange transactions is less than
18 months.
The value of current positions at year end is presented in
Note 26 to the financial statements.
Q
Interest rate risk
Interest rate risk is managed centrally by our Coordination
Centre in Brussels. The latter has a reporting obligation for its
operations and measures monthly performance in order to
identify:
Q
the outcome of actions taken;
Q
whether or not the actions undertaken comply with the
Group’s risk policy.
The control of compliance with internal risk limits and the
monitoring of the Carrefour Group’s policy by the Coordination
Centre are the responsibility of the Risks Committee. The latter,
chaired by the Group’s Chief Financial Officer, meets at least
once every two months.
The management procedures of the Coordination Centre are
subject to approval by the Audit Committee.
To achieve its aims, the Coordination Centre has various
reporting schedules (weekly, monthly and annual).
The result of the calculation (on short-term debt in accordance
with paragraph 6.4.2 of the recommendation) is as follows:
Q
in the event of a decline of 1% in rates, interest income would
improve by 41 million euros, or 8.5% of interest income;
Q
in the event of a rise of 1% in rates, interest income would fall
by less than 6 million euros, or 1.25% of interest income.
Q
Liquidity risk
Following the renegotiation of syndicated loans in 2004, the
Group is no longer subject to any financial covenants.
The breakdown of debt by expiration date and currency is
presented in Note 25 and the commitments received from
financial institutions in Note 29.
Q
Share risk
As of 31 December 2006, the Group held only one treasury
share and thus is not exposed to share risk.
Furthermore, marketable securities and financial investments
are primarily composed of monetary investments, where
Group exposure is low.
LEGAL RISKS
In the normal course of business, the Group’s companies are
involved in a certain number of legal proceedings or litigation,
including disputes with tax and social security authorities.
A provision for contingency and loss has been set aside
for expenses that can be estimated with sufficient reliability
and are deemed probable by the companies and their
expert assessors.
The amount of provision made for after-sales services, tax, social
security and legal expenses and risks relating to the Group’s
operations totalled 1,549 million euros at 31 December 2006.
None of the disputes in progress involving the Group’s
companies are, in the opinion of their expert assessors, likely to
affect the activity, results or financial situation of the Group in
any significant way.
The Group’s net exposure to interest rate fluctuation risk is
reduced by the use of financial instruments comprising interest
rate swaps and options.
The types of hedges as of 31 December 2006 and the amount
of capital hedged are presented in Note 26 to the financial
statements.
We have calculated our susceptibility to changes in rates in
accordance with the COB recommendation of January 2003.
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INSURANCE
Q
Carrefour’s insurance strategy is aimed, first of all, at protecting
its customers, staff and assets.
The purpose of this insurance is to protect the company’s
assets shown on its balance sheet.
As a result, the Group has negotiated across-the-board global
schemes (in particular physical damage, civil liability,
environmental, construction and transport coverage) ensuring
uniform cover for all its subsidiaries, whatever their formats and
wherever they are located, with a few exceptions (Brazil, for
example, which does not allow this type of arrangement).
The policy in force is in the form of an “all risks with exceptions”
policy issued on the basis of existing guarantees on the
insurance market. It covers the traditional risks of this type of
coverage, including fire, theft, natural disasters, operating
losses, etc.
Furthermore, the Group ensures that the new acquisitions
made over the year rapidly obtain its across-the-board cover
or, where applicable, benefit from its DIC/DIL cover policies.
Carrefour’s insurance strategy identifies and assesses existing
and emerging risks in close collaboration with operational
managers, Quality Management and Safety Management,
and puts in place prevention measures through both
centralized and local policies, thanks to links in each country.
The Group covers all its transferred risks through the insurance
market using top-rated international insurance companies.
Monitoring and management methods are regularly controlled
and inspected by independent parties: brokers, insurers, the
captive reinsurance company manager, as well as in-house,
through Carrefour’s Corporate Insurance Department, which
reports to the Quality, Liability and Risks Department.
The following information is provided for informational purposes
only, in order to illustrate the scope of action in 2006, and
should not be considered definitive and inviolable, inasmuch
as, by definition, insurance must anticipate change and adapt
to it. Indeed, the Group’s insurance strategy also depends on
market conditions, its opportunities and any risk assessments
that may be conducted by general management.
Furthermore, in order to optimize its insurance costs and
manage its risks appropriately, Carrefour has a policy for the
maintenance of its frequency claims, through its captive
reinsurance company and, since 1 January 2005, through its
own insurance company located in Ireland: Carrefour
Insurance Limited, accredited by the Irish authorities. Its results
are consolidated in the Group’s financial statements.
This direct insurance company primarily covers risks of property
damage and operating losses for subsidiaries in Europe on a
Free Provision of Services basis. Subsidiaries located outside
the Europe Zone are re-insured by the Group. A stop-loss per
claim and per insurance year has been put in place in order
to protect the interests of the captive and limit its commitments.
Beyond a certain limit, risks are transferred to the insurance
market.
This same subscription strategy applies to civil liability risks, but
only as regards re-insurance; these risks are reinsured by the
Group’s captive insurance company. The captive re-insurance
company’s exposure is limited per claim and per insurance
year. Beyond these limits, depending on results, risks are
transferred to the traditional insurance market.
68
70
Damage to property and Operating Loss coverage
Deductibles are appropriate to the different store formats and
countries. For certain store formats, Carrefour has a Self Insured
Retention policy adapted to a well targeted loss experience.
The programme put in place by the Group offers a guarantee
limit of 200 million euros per claim in direct damages and
operating losses combined. This programme includes sub-limits,
particularly in the area of natural disasters. Over the course of
the year, certain sub-limits have been revised upwards.
The exclusions in force in this contract comply with market
practices. The contract was renewed on 31 December 2006.
Q
Civil liability coverage
This covers the financial consequences of Carrefour’s civil
liability in cases in which it is pursued and found liable as a
result of bodily injury, property damage or consequential
damage (in the latter case with sub-limits and depending on
the legislation in force) suffered by a third party which may
have been caused by the Group, both during operations and
after delivery.
The majority of the Carrefour Group’s sites are classified as ERP
sites (Establishments Receiving the Public); as a result, its
exposure to the risks inherent in this activity must be specifically
taken into consideration and requires great vigilance.
Deductibles vary from country to country. The exclusions in
force in this contract comply with market practices and
primarily concern certain substances recognized as toxic,
carcinogenic, etc.
Carrefour is covered for the risk of harm to the environment as
part of its global civil liability insurance scheme.
Such risk requires a specifically designed approach due to the
conditions imposed by re-insurers, which offer more limited
guarantees for gradual pollution risks.
Nevertheless, Carrefour has set up specific coverage
dedicated to these types of risk.
The maximum cover amount is 15 million euros per loss and per
insurance year for so-called gradual pollution risks.
76
Q
115
Special risks
This essentially means coverage for corporate officers.
Coverage for these risks is adapted as closely as possible to
the Group’s exposure. Given the sensitive nature of this
information, the coverage amounts for these various contracts
remain confidential.
Q
Construction coverage
This covers operators during construction, as well as the
consequences that may arise from their actions.
The costs incurred to reduce the environmental impact of our
activities are included, in part, in the operating costs of the
Quality and Sustainable Development Department and its
counterparts in the countries in which we operate. The largest
proportion, however, is the operational share corresponding to
the amounts allocated to specific projects.
Environmental policies and risk management are inherent to
and managed by each sector and are not managed solely
by the Quality and Sustainable Development Department.
The coverage amounts put in place are in line with market
practices and the limits available on the insurance market for
this type of risk.
Q
Employee benefits coverage
In compliance with current legislation and with collective
bargaining agreements and other company agreements,
schemes for covering the risks of occupational injury, medical
expenses and welfare and retirement costs have been put in
place in each country.
INDUSTRIAL AND ENVIRONMENTAL RISKS
The Carrefour Group is strongly committed to a policy of
environmental responsibility.
Since our business does not involve major direct environmental
risk, we have identified the main environmental impacts on
which the Group has taken action:
Q
prevention of risks related to the operation of service stations
(ground pollution, hydrocarbons, etc.);
Q
control of the consumption of refrigerants and energy;
Q
pollution by automobiles (car parks, distribution of less
polluting fuels);
Q
logistics: reduction of atmospheric emissions and research
into less polluting alternative transport systems;
Q
control of nuisances for local residents (via noise reduction,
landscaping, etc.);
Q
management of natural resources (fish stocks, wood, etc.);
Q
reduction of the environmental impact of packaging (via
ecologically designed packaging and reductions in the use
of packaging);
Q
waste conversion and recycling;
Q
water management.
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Consolidated
Financial Statements
INTRODUCTION
The following are presented for prior periods: the Income
Statement as of 31 December 2004 restated in accordance
with IFRS 5 (Non-current assets held for sale and discontinued
operations) for operations discontinued in 2005 and 2006, as
well as the Income Statement as of 31 December 2005, restated
for operations discontinued in 2006.
IFRS 5 specifies the reporting rules concerning assets held for
sale, and the presentation and information required concerning
discontinued operations. In particular, the standard requires
that assets held for sale be presented separately in the balance
sheet and that the results of discontinued operations be
presented separately in the income statement. A discontinued
operation is a component of an entity which has been
separated from the entity or which is classified as being held
for sale and:
Q
which represents a line of activity or a primary and distinct
geographic region;
Q
is part of a unique and coordinated plan for its separation
from a line of activity or from a distinct geographic region;
Q
or is a subsidiary acquired exclusively for purposes of resale.
The standard requires that the results of discontinued operations
be presented separately in the income statement for all
comparative periods. Thus, as of 31 December 2006, the results
of operations disposed of in 2006 must also be restated in the
accounts of 31 December 2004 and of 31 December 2005.
Consequently, the comparative income statements as of
December 2004 and December 2005 differ from those published
previously.
70
Similarly, the cash flow tables as of 31 December 2004 and 2005
must present the impact of these operations on distinct lines
for operational, investment and financing activities.
The 2004 and 2005 balance sheets remain unchanged,
however.
The Group decided in 2005 to change its method of estimating
the depreciation period for its buildings, raising it from 20 to
40 years. In 2004, the depreciation allowances presented in
the tables below are still presented over 20 years.
The main aggregate values from the accounts as of
31 December 2004 restated in accordance with IFRS 5
and presenting depreciation over 40 years, are as follows:
Q
Net sales = 169,113 million;
Q
EBIT = 13,334 million;
Q
Net income - Group share = 11,702 million.
76
115
CONSOLIDATED INCOME STATEMENT
Sign convention (- expenses + income)
Notes
31/12/2006
% Var.
31/12/2005
31/12/2004
Net sales
4
77,901.1
6.6%
73,059.5
69,112.6
Other income
5
1,042.5
5.4%
989.4
980.4
78,943.6
6.6%
74,048.9
70,093.0
6
(61,203.6)
6.5%
(57,480.2)
(54,264.2)
17,740.1
7.1%
16,568.7
15,828.8
Total income
Cost of sales
Gross margin from Current operations
Sales, general and administrative expenses
7
(12,894.8)
7.6%
(11,986.5)
(11,140.6)
Depreciation, amortization and provisions
8
(1,586.9)
11.0%
(1,429.7)
(1,497.9)
3,258.4
3.4%
3,152.5
3,190.3
256.5
(2.9%)
264.2
219.7
(240.6)
(15.6%)
Non-recurring income
9
Non-recurring expenses
9
EBIT
Interest income
3,274.3
10
Net debt expense
Other financial income and expenses
Income before taxes
Income tax
Net income from companies consolidated
by the equity method
(274.7)
3,135.2
(480.7)
(424.1)
(398.3)
(393.2)
(55.5)
(51.5)
(87.5)
2,681.8
2,654.5
(785.1)
(806.7)
4.2%
(810.2)
1,984.5
4.6%
1,896.7
1,847.9
35.8
(29.2%)
50.6
40.7,
1,947.3
1,888.6
2,020.3
12
6.6%
(285.0)
3,131.7
(449.9)
2,794.7
11
of consolidated companies
Net income from discontinued operations
(479.6)
4.6%
411.3
3.8%
ns
(365.1)
(143.2)
Total net income
2,431.6
53.7%
1,582.1
1,745.4
of which Net income - Group share
2,268.5
58.0%
1,436.0
1,591.2
of which Net income from recurring operations
- Group share
1,856.9
3.3%
1,797.6
1,733.1
of which Net income from discontinued operations
- Group share
411.7
ns
(361.6)
(141.9)
of which Net income - minority share
163.4
9.2%
149.6
154.2
(in euros)
31/12/2006
Earnings per share from recurring operations
(before dilution)
2.64
Earnings per share from recurring operations
(after dilution)
2.63
% Var.
31/12/2005
31/12/2004
2.5%
2.57
2.49
2.4%
2.57
2.49
71
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70
ASSETS
Goodwill
Notes
31/12/2006
31/12/2005
31/12/2004*
14
10,852
10,235
9,329
Other intangible assets
14
1,038
862
730
Tangible fixed assets
15
13,736
13,401
12,617
Financial assets
16
1,111
1,175
1,141
Investments in companies accounted for by the equity method
16
417
467
247
Deferred tax on assets
17
922
1,029
1,066
Investment properties
18
455
463
481
Consumer credit from financial companies
Non-current assets
Inventories
19
Commercial receivables
20
Consumer credit from financial companies short term
Tax receivables
1,398
1,594
29,030
27,205
6,051
6,110
5,621
3,620
3,451
3,147
2,586
2,357
1,627
553
598
423
Other assets
21
815
813
900
Cash and cash equivalents
22
3,697
3,733
3,203
23
158
Current assets
17,346
17,220
14,921
Total assets
47,533
46,250
42,126
Assets classified as held for sale (1)
72
1,656
30,187
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115
LIABILITIES
Notes
Shareholders’ equity, Group share
31/12/2006
9,486
Shareholders’ equity, minority interest
Shareholders’ equity
31/12/2005
8,385
31/12/2004*
6,947
1,017
1,001
929
10,503
9,386
7,876
Borrowings
25
7,532
7,628
7,340
Provisions
23
2,256
2,325
1,954
280
226
353
Deferred tax liabilities
Consumer credit refinancing
Non-current liabilities
Borrowing - under 1 year
25
Trade payables
516
264
255
21,087
19,830
17,778
2,474
2,895
2,632
16,449
16,025
14,721
Consumer credit refinancing short term
3,427
3,199
2,654
Tax payables
1,172
1,241
1,388
2,910
3,022
2,952
13
38
Current liabilities
26,446
26,420
24,347
Total liabilities and shareholders’ equity
47,533
46,250
42,126
Other liabilities
Liabilities classified as held for sale (1)
24
* IAS standards 32 and 39 pertaining to financial instruments were applied as of 1 January 2005. Only the financial statements as of 31
December 2005 and 31 December 2006 are impacted by the application of these standards.
(1) In 2005, the assets and liabilities held for sale correspond to the assets and liabilities of Cash & Carry operations in Spain, the Czech
Republic and Slovakia. In 2006, the assets and liabilities held for sale correspond to the assets and liabilities of operations in Slovakia.
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CONSOLIDATED CASH FLOW STATEMENT
Income before tax (1)
31/12/2006
31/12/2005
31/12/2004
2,795
2,682
2,555
Operating activities
Tax
Provision for amortization
Capital gains and losses on sales of assets
Changes in provisions and impairment
Dividends on companies accounted for by the equity method
Impact of discontinued activities
Cash flow from operations
(783)
1,666
(752)
1,514
(827)
1,887
(129)
(160)
(58)
63
302
(157)
8
6
(47)
(34)
(10)
78
3,586
3,582
3,432
101
41
861
(227)
153
14
Change in cash flow from operating activities
(excluding financial companies)
(126)
194
4,307
Change in working capital
Change in consumer credit commitments
Net cash from operating activities
10
(27)
(5)
3,469
3,749
4,302
(3,368)
(2,899)
(2,463)
Investing activities
Acquisitions of tangible and intangible fixed assets
Acquisitions of financial assets
Acquisitions of subsidiaries
(65)
(51)
(123)
(529)
(751)
(315)
Disposals of subsidiaries
1,345
565
19
Disposals of fixed assets
688
686
544
Disposals of investments
45
26
375
Subtotal Investments net of Disposals
Other uses
Net cash from investing activities
(1,885)
(2,425)
(1,963)
(14)
(85)
(74)
(135)
(107)
(110)
(2,033)
(2,617)
(2,148)
Financing activities
Proceeds on issue of shares
6
88
(368)
Dividends paid by Carrefour (parent company)
(705)
(656)
(525)
Dividends paid by consolidated companies to minority interests
(109)
(102)
(152)
Change in shareholders’ equity and other instruments
Change in borrowings
Net cash from financing activities
Net change in cash and cash equivalent before currency impact
Impact of currency fluctuations
Net change in cash and cash equivalent after currency impact
(92)
(799)
214
(1,485)
(50)
14
(36)
0
125
3
(542)
590
(59)
531
45
(2,641)
(487)
(27)
(514)
Cash and equivalents at beginning of year
3,733
3,202
3,717
Cash and equivalents at end of year
3,697
3,733
3,202
(1) Including financial interest for 568 million euros at 31 December 2006 and 569 million euros at 31 December 2005.
74
(1,641)
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115
VARIATION IN CONSOLIDATED SHAREHOLDERS’ EQUITY BEFORE ALLOCATION OF INCOME
Shareholders’ equity at 01/01/2004
before allocation
Reserves
Currency Reserves for
relating to
translation
fair value
variations
Capital
adjustment, variation
in shareGroup
in financial
holders’
share
instruments
equity
1,790
0
Foreign currency translation adjustment
0
0
0
66
0
Income 2004
Total income and expenses recorded
for the period 2004
0
66
0
Dividends 2003
(28)
Effects of changes in consolidation scope
and other movements (2)
before allocation
1,762
Impact of IAS 32/29
after impact of IAS 32/29
0
66
(257)
1,762
(257)
4,408
6,198
1,036
7,234
66
1
67
0
66
1
67
1,591
1,591
154
1,745
1,591
1,657
155
1,812
0
(525)
(525)
(353)
(381)
(3)
(3)
5,118
(48)
66
(48)
221
Income and expenses recorded directly
as shareholders’ equity at 31/12/2005
221
697
5,118
221
697
(3)
259
41
959
57
1,016
1,436
1,436
146
1,582
1,436
2,395
203
2,598
41
(7)
(656)
(656)
(101)
(758)
31
31
75
106
(27)
(27)
(26)
(52)
5,902
8,385
(393)
0
(393)
0
0
(393)
0
(5)
(5)
(5)
(398)
(7)
3
(40)
(436)
(2)
(439)
2,269
163
2,432
1,870
123
1,993
(64)
370
(43)
9,386
2,269
(706)
Change in capital and premiums
Impact of changes in consolidation scope
and other movements
1,001
2,264
(706)
(36)
(384)
262
Dividends 2005
1,762
7,876
41
Income 2006
before allocation
(79)
(170)
757
(393)
Total income and expenses recorded for 2006
929
(373)
60
Adjustment to the fair value of financial instruments
(167)
(628)
697
Impact of changes in consolidation scope
and other movements
763
8
7,492
Change in capital and premiums
(36)
(103)
850
Dividends 2004
1,762
Total
Minority shareinterests holders’s
equity
6,642
Income 2005
Total income and expenses recorded for 2005
6,947
(305)
697
Adjustment to the fair value of financial instruments
before allocation
Shareholders’
equity,
Group
share
66
Adjustment to capital and premiums (1)
Other
reserves
and
income
7,396
(64)
9,486
(106)
(812)
7
7
(8)
(72)
1,017
10,503
(1) The change in capital and premiums in 2004 was due to the cancellation of treasury stock. The difference between shareholders’
equity in the statutory financial statements and the consolidated financial statements can be explained by 216,000 shares classified
as shares for cancellation in the statutory financial statements and cancelled in the consolidated financial statements.
(2) The reduction in consolidated reserves in 2004 arose from the redemption of certain minority shares, mainly in Spain, Brazil and France.
.
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70
NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: ACCOUNTING PRINCIPLES
The Carrefour group’s consolidated financial statements for
fiscal year 2006 were drawn up in euros, the company’s
functional currency, in accordance with International Financial
Reporting Standards (IFRS), applicable since 1 January 2005,
as approved by the European Union.
The consolidated financial statements as of 31 December 2006
were adopted by the Management Board on 27 February 2007.
The consolidated financial statements were drawn up on the
basis of historic cost, with the exception of certain assets and
liabilities stated in accordance with IAS standards 32 and 39,
pertaining to financial instruments. The asset and liability
categories concerned are described, where applicable, in the
corresponding notes below.
Non-current assets and groups of assets held for sale are valued at
their book value or fair value minus sale costs, whichever is lower.
The preparation of the consolidated financial statements
involves the consideration of estimates and assumptions made
by the Group’s management, which may affect the book value
of certain asset and liability items, income and expenses, as
well as information provided in the notes to the financial
statements. The Group’s management reviews its estimates
and assumptions regularly, in order to ensure their relevance
to past experience and to the current economic situation.
Depending on the changes in these assumptions, items
appearing in future financial statements may be different from
current estimates.
The main estimates made by management when preparing
the financial statements concern the valuations and useful
lives of intangible (Note 14) and tangible (Note 15) operating
assets and goodwill (Note 14), the amount of provisions for risks
and other provisions relating to the business (Note 23), as well
as assumptions made for the calculation of pension
commitments (Note 23) or deferred taxes (Note 17).
Details of the main assumptions made by the Group are
provided in each of the paragraphs in the Appendix devoted
to the financial statements.
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The only assumption made by Management which has or may
have a significant impact on the financial statements concerns
the accounting position adopted while waiting for the IASB’s
final position on the treatment of commitments for the buy-out
of minority interests described in the section on “Financial debt
and derivatives” in Note 1.
IAS standards 32 and 39 pertaining to financial instruments
were applied as of 1 January 2005.
IFRS 5 pertaining to non-current assets held for sale and
discontinued operations was applied early, as of 1 January 2004.
NEW STANDARDS AND INTERPRETATIONS
APPLICABLE IN 2006
Q
In accordance with IFRIC Interpretation 4, an analysis was
conducted on contracts not having the legal status of a
lease contract, but which could be characterized as such.
This analysis did not result in any impact on the financial
statements.
Q
The amendment to IAS 19 (Employee benefits) introduced
the option of including in shareholders’ equity the actuarial
gains and losses relating to defined pension plans and
specifies the additional information to be supplied. The Group
decided not to take advantage of this option.
Q
The amendment to IAS 21 (Effects of changes in foreign
currency exchange rates) pertaining to net investments in
foreign operations specifies that the exchange rate
differentials generated by monetary factors as part of a net
investment in a foreign operation, regardless of whether they
are denominated in a currency other than the functional
currency of the entity or the currency of the foreign operation,
are reclassified under equity. This amendment did not have
an effect on the financial data presented.
Q
The amendments to IAS 39 have no effect on the consolidated
financial statements.
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Q
The amendment to IAS 39 (Financial instruments: Recognition
and Measurement - cash flow hedges of forecast intragroup
transactions), specifies that it is now possible to qualify as an
item hedged against exchange risk in a cash flow hedge ,
a future intra-group forecast transaction which is highly
probable, provided that this transaction is denominated in
a currency other than the entity’s functional currency and
provided that it has an effect on the income statement.
Q
IFRIC Interpretation 7 (Applying the restatement approach
under IAS 29: Financial reporting in hyperinflationary
economies), specifies how IAS 29 should be applied when
an economy becomes hyperinflationary, particularly with
regard to the reassessment of non-monetary elements and
the reporting of deferred tax that results therefrom.
Application of IFRIC 7 is mandatory in the 2007 consolidated
Q
The amendment to IAS 39 (Fair value option) limits the fair
value option to financial instruments that fulfil certain
conditions and stipulates that this designation is irrevocable
and must be made at the time of the initial posting.
Q
Q
The amendment to IAS 39 and IFRS 4 relating to Financial
Guarantee Contracts specifies that financial guarantee
contracts are included in the scope of application of IAS 39.
The interpretation of IFRIC 4 (Determining whether an
Arrangement contains a Lease) explains the circumstances
under which contracts that do not have the legal status of
a lease contract must nonetheless be booked as such, in
accordance with IAS 17. This interpretation did not have an
effect on the Group’s financial statements.
IFRIC Interpretation 8 (Scope of IFRS 2 - Share-based payment)
requires that IFRS 2 be applied to all transactions as a part of
which an entity makes share-based payments when the
consideration given appears to be less than the fair value of
the equity instruments granted. The application of IFRIC 8 is
mandatory in the 2007 consolidated financial statements.
Q
IFRIC Interpretation 9 (Reassessment of embedded
derivatives) requires an entity, when it first becomes a party
to a contract or when a change in the terms of the contract
significantly modifies the cash flows that otherwise would be
required under the contract, to assess whether any
embedded derivatives are contained in the contract and
whether they must be accounted for according to IAS 39.
Application of IFRIC 9 is mandatory in the 2007 consolidated
Q
IFRIC Interpretation 10 (Interim financial reporting and
impairment) prohibits the reversal of an impairment loss
recognised at the balance sheet date of a previous interim
period in respect of goodwill or an investment in either an
equity instrument or a financial asset carried at cost. IFRIC
Interpretation 10 is applicable prospectively as of the date
of the first application of IAS 36 (concerning the impairment
of goodwill) and the first application of IAS 39 (concerning
impairment losses on investments in equity instruments or
financial assets carried at cost), which is on 1 January 2004.
Q
The Group’s electrical equipment distribution activities are
not directly concerned by IFRIC interpretation 6 (Liabilities
arising from Participating in a Specific Market - Waste
Electrical and Electronic Equipment). The European Union’s
Directive on Waste Electrical and Electronic Equipment
(WEEE) stipulates that the cost of waste management for
equipment that has been sold to private households before
13 August 2005 should be borne by producers of that type
of equipment that are in the market during the period
specified in the applicable legislation of the individual
member state. This interpretation did not have any significant
effect on the Group’s financial statements.
NEW STANDARDS AND INTERPRETATIONS
FOR SUBSEQUENT APPLICATION APPROVED
BY THE EUROPEAN UNION
The standards, amendments and interpretations existing as of
31 December 2006 and applicable by the Group as of
1 January 2007 were not applied in advance by the Group.
The Group is currently conducting studies in order to measure
the possible effect of their application on the financial
statements.
Q
IFRS 7 (Financial instruments: disclosures) and the amendment
to IAS 1 (Presentation of financial statements - Capital
disclosures), require the disclosure of information pertaining
to the extent of the use of financial instruments in view of the
financial situation and performance of the entity, as well as
qualitative and quantitative information on the nature and
the extent of the risks arising from financial instruments to
which the entity is exposed. Additional information pertaining
to financial instruments and capital will be presented in the
Group’s 2007 financial statements, as per IFRS 7 and the
amendment to IAS 1.
The accounting methods presented below were applied
continuously to all periods presented in the consolidated
financial statements and uniformly by the Group’s entities.
CHANGE IN ESTIMATE
In 2005, the Group decided to make a change in estimate as
to the duration of the depreciation of its buildings, increasing
it from 20 to 40 years.
The change in estimate, reflected in a prospective change in
the duration of depreciation as of 1 January 2005, can be
justified by the fact that the contribution values of the stores,
as determined by expert assessors as part of plans to create
the European property company, Carrefour Property,
demonstrated in 2005 that the buildings still have significant
market value after 20 years. Following the creation of Carrefour
Property, the Group decided to engage in an overall review
of the useful economic life of its assets. AFREXIM (an association
of property experts) thus conducted a sectoral study of the
economic life span of a building. The property expert’s report
concluded in 2005 that the economic life span of a building
within the Group is 40 years.
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Management Report
SCOPE – METHOD OF CONSOLIDATION
The companies over which Carrefour exercises exclusive
control, either directly or indirectly, are fully consolidated.
Control exists when the Group has the power to direct the
financial and operational policies of the entity directly or
indirectly, in order to obtain advantages from its operations. To
assess the degree of control, the potential voting rights that
can currently be exercised or converted are taken into
account. Furthermore, the companies in which the Group
exercises significant influence or joint control are consolidated
by the equity method. The consolidated financial statements
include the Group share in the total amount of profits and losses
recorded by the companies consolidated by the equity
method, after making adjustments to bring their accounting
methods into conformity with those of the Group, as of the
date on which a significant influence was exercised up through
the date on which the significant influence ceased.
When Carrefour has no significant influence over the operational
or financial decisions of the companies in which the Group
owns securities, these are held as financial assets. These
securities may, where appropriate, be subject to a provision for
amortization. The method of amortization is presented in the
section on “Financial Assets”.
For companies operating in countries with high inflation rates
(e.g., Turkey in 2005, but none during fiscal year 2006):
Q fixed assets, equity investments, shareholders’ equity and other
non-monetary items are revalued based on the reduction in
the general purchasing power of the local currency during
the fiscal year; these items are restated by means of a
relevant price index as of the balance sheet date;
Q
all balance sheet items, with the exception of the Group’s
share of shareholders’ equity, are then converted into euros
on the basis of the exchange rates in effect at the end of
the fiscal year;
Q
with respect to the Group’s share of shareholders’ equity, the
opening balance is carried forward at the value in euros at
the end of the previous fiscal year; other movements are
converted at current foreign currency exchange rates. The
difference thus created between the assets and liabilities in
the balance sheet is recorded in a foreign currency translation
adjustment account included as shareholders’ equity –
Group share;
Q
the income statement in local currency is adjusted for the
effects of inflation between the date of the transactions and
the end of the fiscal year. All items are then converted based
on the exchange rates in effect at the year end.
SEGMENT-BASED INFORMATION
The accounting principles used for segment-based information
are identical to those used for preparing the consolidated
BUSINESS COMBINATIONS
The Group has chosen the option offered by IFRS 1, which does
not restate business combinations prior to 1 January 2004 in
accordance with IFRS 3.
As from 1 January 2004, all business combinations are entered
in the accounts by applying the purchase method. The
difference between the purchase cost, which includes expenses
directly attributable to the acquisition, and the fair value of the
assets acquired, net of liabilities and any liabilities assumed
within the framework of the grouping, is shown as goodwill.
Negative goodwill resulting from the acquisition is immediately
recognized in the income statement.
For companies acquired during the course of the fiscal year
and increases in equity interests, only the income for the period
after the acquisition date is shown in the consolidated income
statement. For companies disposed of during the course of the
fiscal year and dilutions, only the income for the period prior to
the disposal date is shown in the consolidated income
statement.
78
CONVERSION OF FINANCIAL STATEMENTS
OF FOREIGN COMPANIES
The Group does not have any “ad hoc” entities.
The Carrefour Group is organized by geographic region (France,
Europe excluding France, Asia and Latin America) as the first
level of segment-based information, and then by the following
store formats: Hypermarkets, Supermarkets, Hard Discount
stores and Other formats (Convenience, Cash & Carry, Financial
companies, etc.), constituting the second level of segmentbased information.
70
For other companies:
Q balance sheet items are converted on the basis of the closing
rate;
Q
income statement items are converted at the average rate
for the year when this is not materially different from the rate
in effect on the date of the transactions.
CONVERSION RATE ADJUSTMENT
FOR FOREIGN COMPANIES
In accordance with the option offered under IFRS 1, the Group
has chosen to restate the translation adjustments accumulated
at 1 January 2004 under “consolidated reserves”. This option
has no impact on the Group’s total shareholders’ equity; it
involves a reclassification within shareholders’ equity from the
entry “Translation adjustments” to the entry “Other reserves”,
totalling 3,236 million euros.
FIXED ASSETS
1) Goodwill
In accordance with IFRS 3, goodwill has not been amortized
since 1 January 2004. Instead, goodwill is subject to an
impairment test during the second half of each year.
The methods of depreciation are described in the paragraph
entitled “Impairment tests”.
2) Intangible fixed assets
Other intangible fixed assets basically correspond to software
programs that are depreciated over a period ranging from
one to five years.
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115
3) Tangible fixed assets
In accordance with IAS 16,“Tangible fixed assets”, land, buildings
and equipment, fixtures and fittings are evaluated at their cost
price at acquisition or at production cost, less depreciation
and loss in value.
The cost of borrowing is not included in the acquisition price
of fixed assets.
Tangible fixed assets in progress are posted at cost less any
identified loss in value.
Depreciation of these assets begins when the assets are ready
for use.
Tangible fixed assets are depreciated on a straight line basis
according to the following average useful lives:
- Construction:
Buildings
40 years
Grounds
10 years
Car parks
6 2/3 years
- Equipment, fixtures and fittings
6 2/3 years to 8 years
- Other fixed assets
4 to 10 years
Depreciation methods, useful life values and residual values
are revised at the close of each fiscal year.
Acquisitions of fixed assets made through a financial lease
agreement, i.e., a contract whose impact is to transfer to a
substantial extent the risks and advantages inherent in the
ownership of an asset to the lessee, are recorded as follows:
Q the assets are capitalized at the fair value of the leased asset
or, if it is lower, at the discounted value of the minimum leasing
instalments. These assets are depreciated over the same
durations as tangible fixed assets owned by the Group or
over the duration of the contract if this is shorter than the
useful life of the asset;
Q
Q
the corresponding debt is recorded in the balance sheet as
a liability;
the lease instalments paid are allocated between the financial
expense and amortization of the balance of the debt.
4) Impairment tests
In accordance with IAS 36,“Impairment of assets”, when events
or changes in the market environment indicate the risk of a loss
in value of tangible and intangible assets, these are the subject
of a detailed review in order to determine whether the net book
value is lower than their recoverable value, defined as their fair
value (minus disposal cost) or their useful value, whichever is
higher. The useful value is determined by discounting future cash
flows expected from the use of the asset.
a) Impairment of goodwill
IAS 36 (Impairment of assets) stipulates that an impairment test
must be performed, either for each Cash-Generating Unit
(CGU) to which goodwill has been allocated or for each group
of CGUs within a sector of activity or geographical segment
for which the return on investment of the acquisitions is
appraised.
The level of analysis at which Carrefour appraises the present
value of goodwill generally corresponds to countries or to
operations per country.
As stipulated in IAS 36, goodwill must be allocated to each
CGU or to each group of CGUs that may benefit from the
synergies of the combined companies. Each unit or group of
units to which goodwill is allocated must represent the lowest
level within the entity at which the goodwill is monitored for
internal management purposes, and must not be larger than
a segment based on either the entity’s primary or secondary
reporting format determined in accordance with IAS 14,
Segment Reporting (activity or geographic region).
The useful value is estimated by discounting future cash flows
over a period of four years with determination of a final value
calculated by discounting the fourth-year figures at the
perpetual rate of growth to infinity and the use of a discount
rate specific to each country.
The specific discount rate for each country takes into
consideration a country’s specific risk.
These discounting rates are validated by the Group’s
Management Board and ranged between 7.7% and 10.85%
for the fiscal year 2006, depending on the country. They break
down as follows:
Q Europe: between 7.7% and 9.55%
Q
Latin America: between 8.55% and 10.85%
Q
Asia: between 7.7% and 9.7%
b) Impairment of tangible fixed assets
In accordance with IAS 36, fixed assets that show identifiable
signs of a loss in value (or negative activity contribution) are
the subject of a detailed review to determine whether their
net book value is lower than their recoverable value, this being
their market value or useful value, whichever is higher.
The useful value is estimated by discounting future cash flows
over a period of ten years plus a residual value, and the market
value is evaluated with regard to recent transactions or
professional practices.
The discount rates used are the same as for impairment testing
of goodwill.
If the recoverable amount is lower than the net book value,
the loss in value is recorded as the difference between these
two amounts. Losses in the value of tangible and intangible
assets with a defined useful life may be reversed at a later date
if the recoverable value becomes higher than the net book
value (within the limits of the initially recorded depreciation)
and of the amortization that would have been recorded if no
loss of value had been observed.
These impairment tests are performed for all fixed assets on an
annual basis.
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Management Report
FINANCIAL ASSETS
4) Assets available for sale
In accordance with IAS 39, financial assets are classified on the
basis of the five categories below:
Q financial assets measured at fair value through the income
statement;
Assets held for sale are financial assets that are not part of the
aforementioned categories. They are valued at fair value.
Unrealized capital gains or losses are recorded as shareholders’
equity until they are sold. When, however, there is an objective
indication of the impairment of an asset available for sale, the
accumulated loss is recognized in the income statement.
Impairment losses recorded on variable income securities
cannot be reversed at a later balance sheet date.
Q
derivatives;
Q
loans and receivables;
Q
assets held to maturity;
Q
assets available for sale.
The classification determines the accounting treatment of
these instruments. It is determined by the Group on the date
on which it is initially recorded, on the basis of the purpose for
which these assets were acquired. Sales and acquisitions of
financial assets are recorded on the transaction date, i.e., the
date on which the Group bought or sold the asset.
1) Financial assets reported at fair value
in the income statement
These are financial assets held by the Group in order to make
a short-term profit on the sale, or financial assets voluntarily
classified in this category.
These assets are valued at their fair value with variations in value
recognized in the income statement.
Classified as current assets in the cash flow equivalents, these
financial instruments include, in particular, UCITS cash shares.
2) Loans and receivables
Loans and receivables are financial assets whose payment is
fixed or can be determined, which are not listed on an active
market and which are neither held for transaction purposes
nor available for sale.
These assets are initially valued at fair value and then at their
amortized cost on the basis of the effective rate of interest method.
For short term receivables without a declared rate of interest, the
fair value will be the same as the amount on the original invoice,
unless the effective interest rate has a significant impact.
These assets are subject to impairment testing when there is
evidence that they have diminished in value. An impairment
loss is recognized if the book value is higher than the estimated
recoverable value.
Debts pertaining to equity interests, other debts and receivables
and commercial receivables are included in this category. They
appear as financial assets and commercial receivables.
3) Assets held to maturity
Assets held until maturity are financial assets, other than loans
and receivables, with a fixed maturity date, whose payments
are determined or can be determined and which the Group
has the intention and capacity of holding until this maturity
date. These assets are initially booked at fair value and then at
their amortized cost on the basis of the effective rate of interest
method.
These assets are subject to impairment testing when there is
evidence that they have diminished in value. An impairment
loss is recognized if the book value is higher than the estimated
recoverable value.
Assets held to maturity are recognized as financial assets.
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70
For listed securities, the fair value corresponds to the market
price. For non-listed securities, it is determined by reference to
recent transactions or by valuation techniques that are based
on reliable and observable market data. When, however, it is
impossible to reasonably estimate the fair value of a security,
it is valued at its historic cost. These assets are then subject to
impairment testing in order to evaluate the extent to which
they are recoverable.
This category contains primarily non-consolidated equity
securities and marketable securities that do not comply with
other definitions of financial assets. They are shown as financial
assets.
INVESTMENT PROPERTIES
With regard to IAS 40, investment properties are tangible asset
items (buildings or land) owned for leasing or capital valuation.
As for the criteria that apply to this standard, those assets not
used for operational purposes are generally shopping malls
within the Group. The Group considers that shopping malls (i.e.,
all the businesses and services established behind the stores’
cash registers) in full ownership or co-ownership are investment
properties.
Investment properties are posted at their historic value and
depreciated over the same period as tangible fixed assets of
the same nature.
An assessment of the fair value of investment properties is
performed on an annual basis. This assessment is performed by
applying a multiple that is a function of the calculated
profitability of each shopping mall and a capitalization rate
based on the country to the annualized gross rents generated
by each investment property.
The fair value is presented in Note 18.
INVENTORIES
Inventories are valued at the most recent purchase price plus
any additional costs, a method that is well suited to rapid
inventory turn-around and does not generate a significant
difference with the FIFO method. The cost price includes all
costs that constitute the purchase cost of the goods sold (with
the exception of foreign currency losses and gains) and also
takes into consideration all the conditions obtained at the time
of purchase and from supplier services.
In accordance with IAS 2 (Inventories), inventories are valued
at their production cost or their net present value, whichever
is lower.
The net present value is the estimated sales price less additional
costs necessary for the sale.
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115
OPERATING RECEIVABLES
Operating receivables generally include trade receivables,
franchisee receivables and rents receivable from shopping
malls. Where appropriate, they are subject to depreciation,
which takes into account the debtor’s capacity to honour its
debt and the collection period of the receivable.
OUTSTANDING CUSTOMER RECEIVABLES /
REFINANCING TO FINANCIAL SERVICE COMPANIES
Customer receivables due to financial service companies refer
primarily to consumer credit granted to customers of companies
within the Group’s scope of consolidation. These loans, together
with the amounts outstanding from refinancing that back them,
are considered to be assets and liabilities held until their
maturity date and are classified on the basis of their maturity
date as current or non-current assets and liabilities.
CASH AND CASH EQUIVALENTS
Cash equivalents are short-term investments that are highly liquid,
can easily be converted into a known cash amount and are
subject only to a negligible risk of a change in value.
Cash refers to cash in hand and demand deposits.
PROVISIONS
In accordance with IAS 37 (Provisions, Contingent liabilities and
Contingent assets), provisions are posted when, at year end,
the Group has a present, legal or implicit obligation arising from
a past event, the amount of which can be reliably estimated
and the settlement of which is expected to result in an outflow
of resources representative of economic advantages. This
obligation may be of a legal, regulatory or contractual nature.
These provisions are estimated on the basis of their type, in view
of the most likely assumptions. The amounts are discounted
when the impact of the passage of time is significant.
EMPLOYEE BENEFITS
The Group’s employees enjoy short-term benefits (paid leave,
sick leave, profit-sharing), long-term benefits (long-service
medals, seniority bonuses, etc.) and post-employment benefits
with defined contributions and benefits (retirement bonuses
and benefits, etc.).
a) Defined contribution schemes
Defined contribution schemes are schemes whereby the
Company makes periodic fixed contributions to external
benefit agencies that provide administrative and financial
management. These schemes free the employer from any
further obligation, with the agency taking responsibility for
payment to employees of the amounts owed to them (basic
Social Security pension scheme, complementary pension
scheme, pension fund with fixed contributions).
These contributions are recognized as expenses when they
are due.
b) Defined benefit schemes and long-term benefits
The Carrefour Group makes provision for the various defined
benefit schemes dependent on the accumulated years of
service within the Group that are not totally pre-financed.
This commitment is calculated annually on the basis of the
method of projected units of credit, on an actuarial basis,
taking into consideration factors such as salary increases,
retirement age, mortality, personnel rotation and discount
rates.
The discount rate is equal to the interest rate, at the balance
sheet date, of top-rated bonds with a due date close to the
due date of the Group’s commitments. The calculations are
made by a qualified actuary using the projected unit
method.
The Group has decided to apply the “corridor” method,
whereby the effect of variations in actuarial terms is not
recognized on the income statement, as long as the former
remain within a range of 10%. Thus, actuarial differences
exceeding 10% between the value of the commitment and
the value of the hedging assets – whichever is higher – on the
income statement are spread over the expected average
working life of employees benefiting from this scheme.
In accordance with the option offered by IFRS 1, the Group has
elected to recognize its actuarial gains and losses on its pension
commitments that have not yet been recognized in the French
financial statements at 31 December 2003, directly by offsetting
shareholder’s equity at 1 January 2004.
c) Share-based compensation
In accordance with the option offered by IFRS 1, the Group has
elected to limit the application of IFRS 2 to stock option plans
paid in shares, allocated after 7 November 2002, the rights to
which had not yet been acquired at 1 January 2004. This
application had no effect on total shareholders’ equity at 1
January 2004.
The plans granted between 2003 and 2006 fall within the scope
of IFRS 2 (Share-based compensation). These are subscription
or purchase options reserved for employees with no special
acquisition conditions, aside from effective presence at the
end of the vesting period.
The benefits granted that are remunerated by these schemes
are posted as expenses, offsetting a capital increase over the
vesting period. The expense recognized for each period
corresponds to the fair value of the assets and services received
on the basis of the Black-Scholes formula on the date on which
these were granted and spread over the vesting period.
The free share allocation plans granted by the Group also give
rise to the recognition of an expense spread over the vesting
period. The plans granted in 2004 and 2005 are dependent on
the achievement of non-market objectives; since, however, it
is thought to be unlikely that these objectives will be achieved,
no expense has been recognized for these plans.
The plans granted in 2006 are conditional, in part, on the
effective presence of the beneficiary at the end of the vesting
period and in part on the achievement of qualitative objectives.
The 2006 plans gave rise to the recognition of an expense
during the fiscal year.
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Management Report
In view of the size and non-recurrence of plans granted in 2006
(number of beneficiaries, vesting period, introduction of free
shares), the expenses related to share-based compensation
was kept in “non-current expenses” at 31 December 2006.
Details of share allocation plans are provided in the
management report.
INCOME TAX
Deferred taxes are calculated at the tax rate in effect at the
beginning of the following fiscal year, on the basis of the carryforward method. Deferred taxes are reviewed annually when
the accounts are closed.
Tax expense for the fiscal year includes tax payable and
deferred tax.
Deferred tax is calculated according to the balance sheet
method of tax effect accounting on the basis of temporary
differences between the book value entered in the consolidated
financial statements and the tax bases of assets and liabilities.
Deferred taxes are accounted for based on the way in which
the Group expects to realize or settle the book value of assets
and liabilities, using tax rates that have been enacted by the
balance sheet date.
Deferred tax assets and liabilities are not discounted and are
classified in the balance sheet as non-current assets and
liabilities.
Cash flow hedge: Derivatives intended to hedge the floating
rate of borrowing are considered to be financial cash flow
hedges. The gain or loss relating to variations in fair value
deemed to be effective is stated as equity until the hedged
transaction is itself recognized in the Group’s financial
statements. The portion considered to be ineffective is directly
recorded as financial income/expense.
Fair value hedge: Issue swaps backed by fixed-rate bonds are
considered to be fair value hedge instruments. Financial
liabilities hedged by these swaps are revalued at the fair value
of the borrowing on the basis of interest rate changes. Fair value
changes are recorded in the income statement and are offset
by corresponding variations in rate swaps for the effective
portion.
Other derivatives: They are recorded at market value and fair
value variations are recorded as profit or loss.
b) Fair value
The market values of exchange rate and interest rate instruments
are determined on the basis of valuation models that are
recognized on the market or by the use of rates established
by external financial institutions.
The values estimated by valuation models are based on the
discounting of expected future cash flows. These models use
criteria based on market data (interest rate and exchange
rate curves) obtained from Reuters.
Deferred tax assets are recognised for deductible temporary
differences, unused tax losses and unused tax credits to the
extent that it is probable that taxable profit will be available
against which the deductible temporary differences can be
utilised.
The fair value of long-term debt is estimated based on the
market value of bonds or of all future flows discounted on the
basis of market interest rates for a similar instrument (in terms
of currency, maturity, type of interest and other factors).
FINANCIAL DEBT AND FINANCIAL INSTRUMENTS
PSDIs contracted by the Group in 1992 fulfil the function of
derivatives under IAS 39 to the extent that the three following
characteristics are simultaneously fulfilled:
Financial debt includes:
Q
bonds;
Q
outstanding accrued interest;
Q
outstanding amounts relating to financial lease agreements;
Q
bank loans and facilities;
Q
subordinated loans of unspecified duration (PSDI);
Q
securitized debt for which the group incurs credit risk;
Q
minority share buyback commitments.
a) Accounting principle
Financial debts are recorded on the basis of the principle of
amortized cost. Initially, they were recorded at market value,
net of transaction costs and premiums directly attributable to
their issue.
Derivative instruments intended to cover exposure to interest
rate risk are entered at market value and used as fair value or
cash flow hedges.
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70
c) Subordinated loans of unspecified duration
Q
the value of the PSDI varies, depending on interest rate
trends;
Q
the amount of initial net investment is low in comparison with
the debt issue;
Q
settlement occurs at a future date.
As a result, in accordance with IAS 39, PSDIs issued by Carrefour
are classified as derivatives and valued at their fair value.
Variations in value are posted in the income statement for the
period.
d) Derecognition of financial assets
In December 2002, the Group contracted into a programme
for securitizing receivables. This programme only partially
transfers the risks and advantages of the variation in value
discounted by future cash flows from receivables. Consequently,
part of these securitized receivables have been recognized
as financial debt.
76
115
e) Commitments for the buyback of minority shares
The Group has undertaken to buy back the shares of minority
shareholders in some of its fully consolidated subsidiaries. For
the Group, these buyback commitments correspond to option
commitments (sales of put options). The exercise price of these
transactions may be fixed or determined by a pre-defined
calculation formula; furthermore, these transactions can be
exercised at any time or at a predetermined date.
While waiting for IFRIC to come to a final decision, we have
chosen the following accounting treatment:
Q
in accordance with the provisions of IAS 32, the Group has
recorded the put options granted to minority shareholders
in the subsidiaries concerned as financial liabilities;
Q
initially, the liability is recorded at the current exercise price
value and then, in later closings, on the basis of the fair value
of potentially purchased shares, if the exercise price is based
on the fair value;
Q
the counterpart of this liability is recorded less minority
interests, with the balance recorded as goodwill. For the sake
of consistency, the obligation to record a liability when the
put option has not been exercised suggests that we continue
to treat these transactions in the same way as we do the
increase in the percentage of shares in controlled
companies;
Q
Q
the later change in commitment value is recorded by
adjusting the goodwill amount (excluding the discounting
effect);
the group share figure is calculated on the basis of the
percentage holding in the subsidiary, without taking into
consideration the percentage of interest attached to sales
of put options.
The accounting principles described above may be revised
on the basis of the conclusions of the studies currently being
conducted by the IFRIC.
FOREIGN EXCHANGE RATE HEDGING INSTRUMENTS
The Group uses foreign exchange rate hedging instruments
(mainly forward currency contracts) to manage and reduce
its exposure to fluctuations in currency rates. These financial
instruments are valued at their fair value and variations in fair
value are treated as follows:
Q
Q
when the instrument is classified as a hedging instrument for
future cash flows, the variations in fair value corresponding
to the effective portion are directly recorded as shareholders’
equity, while the variations corresponding to the ineffective
portion are recorded on the income statement;
when the instrument is classified as a fair value hedging
instrument, variations in fair value are recorded in the income
statement, where they offset the variations in fair value of the
underlying instrument for the effective portion.
ASSETS AND GROUPS OF ASSETS HELD FOR SALE
AND DISCONTINUED OPERATIONS
A discontinued operation is a component of an entity that the
entity has sold or is being held with a view to sale and:
Q
which represents a line of activity or a primary and distinct
geographic region;
Q
is part of a unique and coordinated plan to dispose of a line
of activity or a distinct geographic region; or
Q
is a subsidiary acquired solely in order to be sold.
It is classified as a discontinued operation at the time of its
disposal or at a prior date when the operation satisfies the
criteria for classification as an asset held for sale. When an
operation is classified as a discontinued operation, the
comparative income statement is restated as if the activity
had satisfied the criteria for classification as a discontinued
operation as of the opening of the comparative period.
A group of assets is classified as “non-current assets held for
sale” if its book value is defined primarily through a sale
transaction that is highly probable.
NET SALES
Net sales include only store and warehouse sales.
OTHER INCOME
Other income (financial and travel services, rental income,
franchise fees, etc.) are recorded on a separate line called
“Other income” and recorded under the “Net sales” line in the
income statement.
Certain expenses, such as the cost of payments made by
customers in several instalments and of loyalty schemes not
funded by suppliers, are recorded net of other revenues.
This entry includes fees received by finance companies from
debit cards, traditional credit applications or revolving credit
applications. Fees are spread across the duration of the
contract.
INCOME PER SHARE
The Group presents basic and diluted income per share for its
ordinary shares.
Basic income per share is calculated by dividing the income
attributable to the bearers of the company’s ordinary shares
by the weighted average number of ordinary shares in
circulation during the period.
Diluted income per share is determined by adjusting the
income attributable to bearers of ordinary shares and the
average weighted number of ordinary shares in circulation for
the effects of all potential ordinary dilutive shares, which include
convertible bonds and share subscription options allocated to
members of the workforce.
TREASURY STOCK
Treasury stock are deducted from consolidated shareholders’
equity. Any income from the sale of treasury stock (together
with the corresponding tax effects) is directly charged to
shareholders’ equity and does not contribute to net income
for the fiscal year.
83
61
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Management Report
70
NOTE 2: HIGHLIGHTS FOR THE YEAR
ACQUISITIONS IN THE YEAR
Q
Q
Q
Q
84
Hyparlo: The members of the Arlaud family having decided
to exit Hofidis II early, the Group presented a takeover bid
to Hyparlo’s shareholders on its own, at the price of 39.22 a
share. Upon completion of the simplified takeover bid, on
10 March 2006 Carrefour held 93.89% of the capital stock.
On 21 July 2006, Carrefour acquired 4.4% of the securities.
Since Carrefour did not manage the company until
31 December 2005, the Group’s ownership interests were
consolidated by the equity method. In view of the
developments during the fiscal year, Hyparlo’s operations in
France and Romania were fully consolidated in March 2006.
On the acquisition date, Hyparlo operated five hypermarkets
in Romania and 12 in France (in the Rhône-Alpes region).
The net income – Group share earned between the
acquisition date and the closing date was €17 million.
As of the acquisition date, fixed assets represented
€212 million.
Acquisition of Caprabo: On 30 January 2006, Carrefour Spain
announced the acquisition of two hypermarkets, three minihypermarkets and two service stations from Caprabo. Since
the conditions precedent were satisfied on 18 July 2006, this
acquisition was fully consolidated as of that date.
Acquisition of Dinosol: On 23 October 2006, Carrefour Spain
acquired a company comprising two hypermarkets from
Dinosol, which was fully consolidated.
Acquisition of Ahold Polska: On 1 December 2006, Carrefour
signed a memorandum of agreement concerning the
acquisition of Ahold Polska. This transaction remains subject
to approval by the relevant authorities, which will likely
address the matter during the summer of 2007.
Ahold Polska operates 194 stores, including 15 Hypernova
hypermarkets (six of which are fully owned, while nine are
leased), as well as the Albert supermarkets.
This acquisition had no impact on the financial statements
at 31 December 2006 inasmuch as this acquisition will only
become effective subsequent to the consent of the
competition authorities.
The purchase commitment for Ahold securities appears
under off-balance sheet commitments.
DISPOSALS AND DISCONTINUED OPERATIONS
IN THE YEAR
Q
Withdrawal from South Korea: On 26 September 2006, the
Group sold its subsidiary in South Korea to E-Land for the sum
of 1.5 billion euros. Income from the sale was reported in
“Net income from discontinued operations” in accordance
with IFRS 5.
Q
Sale of Puntocash: On 21 May 2006, following the consent
of the anti-trust authorities, the Group sold its Cash & Carry
subsidiary in Spain to the Miquel Alimentacio group. Income
from the sale was reported in “Net income from discontinued
Q
Discontinuation of supermarket operations in Spain: Earlier,
in 2005, the Group decided to restructure all of its
supermarkets. The costs related to this restructuring, as well
as income from supermarkets sold to third parties or closed,
were reclassified under “Income from discontinued
Q
Discontinuation of supermarket operations in China: In 2006,
the Group decided to discontinue its supermarket operations
in China. The 2006 income as well as the costs of the closings
were reclassified under “Income from discontinued
Q
Discontinuation of supermarket operations in Brazil: In 2005
the Group decided to restructure all of its supermarkets. The
costs related to this restructuring, as well as income from
supermarkets sold to third parties or closed, were reclassified
under “Income from discontinued operations” in
accordance with IFRS 5.
Q
Withdrawal from the Czech Republic: On 30 September
2005, Carrefour announced its intent to acquire Tesco
Taiwan and to transfer its operations in the Czech Republic
and Slovakia to Tesco. Carrefour wished to sell its
11 hypermarkets in the Czech Republic and its four
hypermarkets in Slovakia to Tesco.
On 21 January 2006, the European Union approved the
transaction in the Czech Republic, but referred the decision
on Slovakia to the Slovak authorities.
On 31 May 2006, Carrefour and Tesco closed the transaction
concerning its withdrawal from the Czech Republic and the
acquisition of Tesco’s business in Taiwan.
In accordance with IFRS 5, as of 31 December 2006, income
from disposals in the Czech Republic was reclassified under
“Income from discontinued operations”.
Q
Withdrawal from Slovakia: On 29 December 2006, the
Slovakian authorities announced their opposition to the sale
for reasons of competition. The Group is currently studying
various withdrawal scenarios for fiscal year 2007.
76
115
NOTE 3: SECTORAL INFORMATION
SECTORAL INFORMATION BY REGION
Q
Investments
31/12/2006
31/12/2005
31/12/2004
France
1,095
1,029
1,201
1,529
1,267
761
Latin America
436
332
166
Asia
309
272
237
3,368
2,899
2,365
31/12/2006
31/12/2005
% Var.
Total
Q
Net sales
31/12/2004
France
37,212
35,577
4.6%
35,167
29,850
28,102
6.2%
26,404
Latin America
5,928
5,075
16.8%
3,938
Asia
4,911
4,306
14.0%
3,603
77,901
73,060
6.6%
69,113
Total
Q
Other income
France
31/12/2006
274
31/12/2005
% Var.
31/12/2004
338
(18.9%)
430
271
314
(13.7%)
335
Latin America
332
201
65.4%
101
Asia
165
137
20.8%
115
1,043
989
5.4%
980
Total
Q
Activity contribution, before depreciation, amortization and provisions
31/12/2006
31/12/2005
France
2,347
2,269
1,851
318
Latin America
Asia
Total
Q
% Var.
31/12/2004
3.4%
2,576
1,758
5.3%
1,613
262
21.5%
213
329
294
12.1%
286
4,845
4,582
5.7%
4,688
Depreciation and provisions
France
31/12/2006
629
31/12/2005
% Var.
31/12/2004
556
13.1%
612
643
613
4.9%
645
Latin America
157
129
21.2%
125
Asia
Total
158
131
20.4%
117
1,587
1,430
11.0%
1,498
85
61
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Management Report
70
31/12/2006
31/12/2005
% Var.
France
1,718
1,713
0.3%
1,964
1,208
1,145
5.5%
968
Latin America
161
133
21.8%
88
Asia
171
162
5.4%
170
3,258
3,152
3.4%
3,190
Total
Q
Non-current income and expenses
31/12/2006
31/12/2005
31/12/2004
France
(78)
(124)
(7)
113
109
57
Latin America
(1)
2
(97)
Asia
(18)
(8)
(7)
Total
16
(21)
(54)
Q
Income from companies consolidated by the equity method
31/12/2006
31/12/2005
31/12/2004
France
17
48
26
20
5
16
Latin America
(1)
(2)
(1)
36
51
41
Asia
Total
Q
Net intangible fixed assets
31/12/2006
31/12/2005
31/12/2004
France
4,387
3,910
3,553
6,722
6,447
5,902
682
690
570
Latin America
Asia
Total
Q
99
50
34
11,890
11,097
10,059
31/12/2006
31/12/2005
31/12/2004
4,463
3,979
3,591
Net tangible fixed assets
France
6,378
6,002
5,822
Latin America
1,695
1,531
1,451
Asia
Total
86
31/12/2004
1,199
1,888
1,753
13,736
13,401
12,617
76
Q
115
Net investment properties
France
31/12/2006
31/12/2005
31/12/2004
77
18
25
282
272
343
Latin America
21
20
26
Asia
75
154
86
455
463
481
31/12/2006
31/12/2005
31/12/2004
108
182
98
Latin America
270
355
(25)
227
(6)
763
66
Total
Q
Foreign currency translation - Group share
France
Asia
Total
(8)
370
In accordance with the option offered under IFRS 1, the Group elected to restate translation adjustments accumulated at
1 January 2004 under “Consolidated reserves”. This option had no effect on the Group’s shareholders’ equity; it involved
a reclassification at 1 January 2004, under shareholders’ equity, from the entry “Translation adjustments” to the entry “Other
reserves” in the amount of 3.236 million euros.
Q
Provisions
France
Latin America
Asia
Total
Q
31/12/2006
31/12/2005
31/12/2004
727
697
614
1,110
1,123
980
410
465
324
10
40
37
2,256
2,325
1,954
31/12/2006
31/12/2005
31/12/2004
Trade payables
France
6,378
6,105
5,616
7,953
7,759
7,360
Latin America
1,128
1,039
899
989
1,122
846
16,449
16,025
14,721
Asia
Total
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61
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Management Report
70
Other liabilities
France
31/12/2006
31/12/2005
31/12/2004
1,507
1,534
1,678
995
1,015
888
Latin America
224
243
209
Asia
184
229
177
2,910
3,022
2,952
31/12/2006
31/12/2005
31/12/2004
France
26,307
17,545
16,574
19,928
20,806
18,961
Total
Q
Total balance sheet
Latin America
4,394
3,740
1,541
3,505
2,851
47,533
46,250
42,126
31/12/2006
31/12/2005
31/12/2004
Hypermarkets
1,718
1,327
1,102
Supermarkets
595
563
654
415
317
251
Asia
Total
(243)
SEGMENT INFORMATION BY FORMAT
Q
Investments
Other activities
Total
Q
692
358
2,899
2,365
31/12/2006
31/12/2005
% Var.
Net sales
31/12/2004
Hypermarkets
45,890
42,375
8,3,%
40,788
Supermarkets
13,563
13,229
2,5,%
12,260
7,085
6,441
10,0,%
5,813
Other activities
11,363
11,015
3,2,%
10,253
Total
77,901
73,060
6,6,%
69,113
Q
Net tangible and intangible fixed assets
31/12/2006
31/12/2005
31/12/2004
Hypermarkets
12,165
14,310
13,169
Supermarkets
6,138
7,290
6,994
1,989
1,749
1,412
Other activities
5,334
1,149
1,100
25,626
24,498
22,675
Total
88
641
3,368
76
Q
115
Total balance sheet
31/12/2006
31/12/2005
31/12/2004
Hypermarkets
21,906
20,238
17,471
Supermarkets
4,323
4,398
4,115
2,598
2,629
2,278
Other activities
18,705
18,985
18,261
Total
47,532
46,250
42,126
“Other activities” is mainly composed of convenience stores, cash & carry and holding companies.
NOTE 4: NET SALES
Net sales
31/12/2006
31/12/2005
% Var.
31/12/2004
77,901
73,060
6.6%
69,113
At constant exchange rates, net sales would have been 77,753 million euros.
The impact of exchange rate fluctuations represented 148 million euros at 31 December 2006, including (90) million euros in
Argentina, 334 million euros in Brazil and (171) million euros in Turkey.
Q
Net sales by country
31/12/2006
31/12/2005
31/12/2004
France
37,212
35,577
35,167
29,850
28,102
26,404
Spain
12,354
11,945
11,419
Italy
6,285
6,008
5,878
Belgium
4,340
4,262
4,250
Greece
2,251
2,039
1,828
Portugal
1,195
1,130
1,092
Poland
1,189
1,027
750
Switzerland
485
488
484
1,301
1,203
702
451
0
0
Latin America
5,928
5,075
3,938
Brazil
3,839
3,248
2,453
Argentina
1,356
1,231
1,063
Colombia
734
596
422
Asia
4,911
4,306
3,603
Taiwan
1,326
1,295
1,123
China
Turkey
Romania
2,136
1,765
1,387
Thailand
473
456
421
Malaysia
251
226
204
Indonesia
627
472
382
Singapore
98
92
86
89
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NOTE 5: OTHER INCOME BY KIND
31/12/2006
31/12/2005
% Var.
31/12/2004
Rental income
262
246
6.3%
212
Sub-leasing income
103
85
21.8%
69
Sundry income
678
658
2.9%
699
1,043
989
5.4%
980
Total
“Sundry income” refers essentially to the cost of coupons not financed by suppliers, as well as related products, franchise fees
and income from finance companies.
NOTE 6: COST OF SALES
Other than inventory purchases and variations, the cost of goods sold includes other costs that mainly consist of the costs of
products sold by financial companies, income from discounts and exchange rate differences generated by goods
purchases.
NOTE 7: SALES, GENERAL AND ADMINISTRATIVE EXPENSES
Labour costs
Property rentals
31/12/2006
31/12/2005
% Var.
31/12/2004
7,515
871
7,008
7.2%
6,496
765
14.0%
647
Maintenance and repairs
736
663
11.0%
616
Fees
626
482
29.7%
571
Advertising
1,063
1,070
(0.7%)
1,037
Taxes
499
512
(2.4%)
453
Consumables
597
521
14.6%
479
Other general expenses
988
966
2.3%
842
12,895
11,986
7.6%
11,140
Total
Labour costs remained stable, representing 9.6% of net sales in 2006, as in 2005.
The proportion of “Sales, general and administrative expenses” in net sales remained relatively stable, at 16.5% in 2006 as against
16.4% in 2005.
90
76
115
NOTE 8: DEPRECIATION, AMORTIZATION AND PROVISIONS
In 2005, the Group decided to change its estimate of the duration of the depreciation of its buildings, increasing it from
20 to 40 years.
The depreciation allowances shown in the tables below for 2004 are still presented over 20 years.
Depreciation of tangible fixed assets
Amortization of intangible fixed assets
Amortization of financial lease agreements
31/12/2006
31/12/2005
% Var.
31/12/2004
1,371
1,240
10.6%
1,247
170
154
10.8%
157
29
28
7.1%
49
Depreciation of investment properties
17
14
18.3%
25
Allocations and reversals of provisions
(1)
(6)
(82.0%)
21
1,587
1,430
11.0%
1,498
Total
NOTE 9: NON-CURRENT INCOME AND EXPENSES
31/12/2006
31/12/2005
31/12/2004
Depreciation of assets
(26)
0
(79)
Share-based payments
(69)
(31)
(31)
Restructuring costs
(98)
(227)
(100)
Other non-current income and expenses
208
237
155
16
(21)
(55)
Total
Items of an unusual type due to their nature and frequency are accounted for under non-current income and non-current
expenses.
Other non-current income and expenses are primarily composed of capital gains on disposals.
NOTE 10: INTEREST INCOME
Other financial expenses and income
Debt expense
Income from cash and cash equivalents
Interest expenses
Interest expenses for financial
leasing operations
Total
31/12/2006
31/12/2005
31/12/2004
(55.5)
(51.5)
(69.9)
(424.1)
(398.3)
(410.8)
42.5
34.2
33.0
(431.3)
(401.2)
(419.1)
(35.3)
(31.4)
(24.7)
(479.6)
(449.9)
(480.7)
Other financial expenses and income include the cost of discounting provisions for retirement pensions, which was 31 million euros
at 31 December 2006, 32.6 million euros at 31 December 2005 and 34.7 million euros at 31 December 2004.
The breakdown of the Group’s debt is shown in Note 25 on borrowings.
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NOTE 11: INCOME TAX
Income tax
Deferred tax
31/12/2005
31/12/2004
759
786
809
51
(1)
(2)
Total tax
810
785
807
Actual tax rate
29.0%
29.3%
30.4%
Current income before tax
Standard rate
Surplus tax
31/12/2006
2,795
33.3%
1.1%
Theoretical tax
962
Effects of permanent differences on tax
(92)
Tax effects: income not taxed or taxed at a different rate
(87)
Other
92
31/12/2006
27
Total tax
810
Effective tax rate
29.0%
76
115
NOTE 12: NET INCOME FROM DISCONTINUED OPERATIONS
31/12/2006
Discontinued operations, Group share
Discontinued operations, minority share
Total
In December 2006, net income from discontinued operations
was accounted for by:
Q
the impact over the year of the withdrawal from South Korea
in the amount of 430 million euros;
Q
the impact of the operating losses from supermarkets in
China in the amount of (9) million euros;
Q
capital gains from the disposal of cash & carry operations
in Spain (Puntocash) for 24 million euros and operating
losses of (7) million euros, resulting in net income of
17 million euros;
Q
losses related to the restructuring of supermarkets in Spain
for (7) million euros;
Q
operating losses from Brazilian supermarkets for (4) million
euros and additional costs, amounting to a net loss of
(6) million euros;
Q
operating losses in Slovakia in the amount of (8) million euros
and additional costs of (7) million euros, amounting to a net
loss of (15) million euros;
Q
an adjustment to the sale price of the Prodirest operations
of 1 million euros.
Net sales in South Korea at the disposal date would have been
1,017 million euros. Cash flows at 31 December 2006 were
respectively (86) million euros from operating activities,
(132) million euros from investment activities and 214 million
euros from financing activities. As of the disposal date, total
fixed assets stood at €1,262 million.
For China, cash flows at 31 December 2006 were (5) million
euros arising from operating activities.
For Puntocash and supermarkets in Spain, cash flows at
31 December 2006 were respectively (11) million euros arising
from operating activities and (8) million euros from investment
activities.
For supermarkets in Brazil, cash flows at 31 December 2006
were (6) million euros arising from operating activities.
For Slovakia, cash flows at 31 December 2006 were (4) million
euros arising from operating activities.
arose from:
Q
the impact of the closing of Brazilian supermarkets in the
amount of (196) million euros;
Q
the impact of the closing of Spanish supermarkets in the
amount of (63) million euros;
31/12/2005
31/12/2004
412
(362)
(142)
(0)
(4)
(1)
411
(365)
(143)
Q
income/expense from the period and net income from the
disposal of Catering and Food Service operations in France
in the amount of (22) million euros;
Q
the impact of the withdrawal from Mexico in the amount of
(29) million euros, corresponding primarily to a capital loss,
since net income during the period was insignificant;
Q
losses for the year in the Czech Republic and Slovakia
amounting to (63) million euros;
Q
losses for the year of cash & carry operations in Spain
(Puntocash) amounting to (2) million euros;
Q
the impact of the withdrawal from Japan amounting to
1 million euros, subsequent to the establishment of a reserve
for depreciation of 90 million euros at 31 December 2004;
Q
operating gains for the period in South Korea amounting to
13 million euros;
Q
operating losses for the period of supermarkets in China
amounting to (4) million euros.
arose from:
Q
an unrealized capital gain in Japan amounting to
(90) million euros;
Q
capital gains from the sale of shares (Modelo Continente,
Optical activities in the Czech Republic) amounting to
11 million euros;
Q
losses for the year in the Czech Republic and Slovakia
amounting to (23) million euros;
Q
income for the period in Mexico amounting to 25 million euros;
Q
losses for the period in Japan amounting to (30) million euros;
Q
net income for the period from Catering and Food Service
operations in France amounting to 11 million euros;
Q
operating losses of Brazilian supermarkets amounting to
(16) million euros;
Q
operating losses of Spanish supermarkets amounting to
(22) million euros;
Q
losses for the year of cash & carry operations in Spain
(Puntocash) amounting to (6) million euros;
Q
operating losses of supermarkets in China amounting to
(2) million euros;
Q
operating income in South Korea amounting to 5 million euros;
Q
other items amounting to a net expense of (5) million euros.
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NOTE 13: NET INCOME PER SHARE
Net income per share before dilution
Net income from recurring operations, Group share
Net income from discontinued operations, Group share
Net income, Group share
Average weighted number of shares
31/12/2006
1,856.9
411.7
2,268.5
704,624,922
31/12/2005
1,797.7
(361.7)
1,436.0
699,470,384
31/12/2004
1,733.1
(141.9)
1,591.2
697,160,633
Net income from recurring operations per share (in euros)
2.64
2.57
2.49
Net income from discontinued operations per share (in euros)
0.58
(0.52)
(0.20)
Net income from Group share per share (in euros)
3.22
2.05
2.28
Net income per share after dilution
Net income from recurring operations, Group share
Net income from discontinued operations, Group share
Net income, Group share
Average weighted number of shares
Dilutive shares
Number of shares restated
31/12/2006
1,856.9
411.7
2,268.5
704,624,922
31/12/2005
1,797.7
(361.7)
1,436.0
31/12/2004
1,733.1
(141.9)
1,591.2
699,470,384
697,160,633
699,470,384
697,160,633
245,864
704,870,786
Net income from recurring operations per share (in euros)
2.63
2.57
2.49
Net income from discontinued operations per share (in euros)
0.58
(0.52)
(0.20)
Net income from Group share per share after dilution (in euros)
3.22
2.05
2.28
In October 2005, the Group completed a repurchase of its own shares (7,075,240 shares).
According to IFRS, treasury stock are not taken into account for the calculation of income per share.
The reduction in the number of shares in circulation in December 2005 compared with December 2006 explains why net income
from recurring operations per share increased less rapidly than net income from recurring operations – Group share.
Restated in view of this transaction, income per share would have increased in line with net income – Group share (by 3.3%).
94
76
115
NOTE 14: INTANGIBLE FIXED ASSETS
Net goodwill
Other gross intangible fixed assets
Amortization of other intangible fixed assets
31/12/2006
31/12/2005
31/12/2004
10,852
10,235
9,329
2,030
1,774
1,581
(1,056)
(953)
(814)
Impairment of other intangible assets
(167)
(163)
(144)
Other net intangible fixed assets
807
657
623
Intangible fixed assets in progress
Net intangible fixed assets
Q
232
205
106
11,890
11,097
10,059
Change to goodwill
(in millions of
euros)
Foreign
Foreign
currency
currency
Net
Net
Net
Acquisitions Disposals Impair– translation
Acquisitions Disposals Impair- translation
goodwill
goodwill
goodwill
2005
2005
ments 2005 adjust2006
2006
ments 2006 adjustend 2004
end 2005
end 2006
ments
ments
2005
2006
France
3,340
281
3,621
438
4,059
Italy
2,971
140
3,111
21
3,132
928
26
954
1,218
13
1,231
Belgium
925
3
Spain
1,213
9
(4)
Brazil
273
53
(92)
Argentina
184
Other countries
Total
423
390
9,329
876
0
(96)
85
319
(6)
313
25
209
(24)
185
17
830
182
(1)
127
10,235
680
(1)
0
(33)
978
(63)
10,852
At 31 December 2006, goodwill in France consisted mainly of Comptoirs Modernes, Euromarché and Hyparlo; in Italy, of GS; in
Belgium, of GB; in Spain, of Continente and the buyback of the shares of minority shareholders in Centros Comerciales Carrefour;
in Brazil, of the RDC stores; and in Argentina, of Norte.
The main acquisitions during the year were Hyparlo and Hamon in France and Tesco in Taiwan.
95
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Change to intangible fixed assets
Gross
At January 1, 2005
13,719
(3,660)
10,059
Acquisitions
428
(251)
177
Disposals
(21)
Foreign currency adjustments
103
Changes in consolidation scope and transfer
At December 31, 2005
Acquisitions
Disposals
(21)
51
154
867
(140)
727
(4,000)
11,097
1,047
1,047
(17)
(192)
Impairment
At December 31, 2006
Net
15,097
Depreciation
Depreciation
(17)
129
(63)
(170)
(170)
(9)
(9)
6
15,941
6
(4,050)
11,890
NOTE 15: TANGIBLE FIXED ASSETS
31/12/2005
31/12/2004
Land
2,897
3,110
3,117
Buildings
8,560
8,031
7,330
12,348
12,064
10,987
Other fixed assets
1,086
1,108
1,077
Fixed assets in progress
1,051
1,055
844
Equipment, fixtures & fittings and installations
Leased land
152
144
145
1,372
1,268
1,217
137
134
99
20
32
1
Gross tangible fixed assets
27,624
26,947
24,816
Depreciation
(12,674)
(12,319)
(11,132)
(1,002)
(944)
(843)
(213)
(283)
(223)
Leased buildings
Leased equipment, fixtures & fittings and installations
Other leased fixed assets
Depreciation of leased fixed assets
Write-down
Net tangible fixed assets
96
31/12/2006
13,736
13,401
12,617
76
Q
115
Leased fixed assets
The Carrefour Group has carried out a review of all its property leasing agreements. Agreements considered to be financial
leasing agreements were capitalized, whereas other agreements were considered simple operating leases.
Financial leasing agreements
Total
Minimum rents to be paid
699
Discounted value
1 to 5 years
More than 5 years
57
200
442
416
51
152
213
Total sub-leasing income receivable
16
n/a
n/a
n/a
Minimum rents paid during the year
178
n/a
n/a
n/a
1
n/a
n/a
n/a
12
n/a
n/a
n/a
Conditional rents
Sub-leasing income
Less than 1 year
Simple leasing agreements
Total
Minimum rents to be paid
5,396
82
891
32
Total minimum income to be received from sub-leasing
Minimum rents paid during the year
Conditional rents
Q
Less than 1 year
1 to 5 years
More than 5 years
788
1,905
2,704
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Change to tangible fixed assets
Gross
Depreciation
and provisions
Net
At 1 January 2005
24 816
(12 198)
12 618
Acquisitions
Disposals
2,562
(796)
Amortization
At 31 December 2005
Acquisitions
Disposals
2,562
345
(1,313)
(451)
(1,313)
871
(362)
509
(506)
(18)
(524)
26,947
(13,546)
2,807
13,401
2,807
(466)
(466)
Amortization
(1,399)
(1,399)
Depreciation
(10)
(10)
(198)
(198)
1,265,
(399)
At 31 December 2006
(1,664)
27,624
(13,888)
13,736
97
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NOTE 16: FINANCIAL ASSETS
31/12/2006
31/12/2005
31/12/2004
Investments in companies accounted for by the equity method (1)
417
467
247
Investments (2)
269
283
538
5
6
12
837
886
590
1,528
1,642
1,388
Loans at more than 1 year
Others
(3)
Total
(1) This item corresponds primarily to securities held in Italy (Finiper).
Net income from companies consolidated by the equity method amounted to 35.8 million euros at 31 December 2006, with goodwill amounting to 15 million euros and cumulative reserves of (20.8) million euros.
(2) In 2004, this item corresponded primarily to Finiper (Italy) securities, now consolidated by the equity method.
(3) This item refers primarily to guarantees and deposits and other capitalized receivables.
NOTE 17: DEFERRED TAX
31/12/2006
Deferred tax assets
922
31/12/2005
31/12/2004
1,029
1,066
Deferred tax liabilities
(280)
(226)
(353)
Total
642
803
714
The nature of deferred taxes is described in Note 1. They correspond to temporary differences between the book values and
fiscal values of assets and liabilities.
Q
Deferred tax bridge table
Net deferred tax
31/12/2004
Foreign cur- Allocations /
rency effect reversals
714
64
3
Other*
31/12/2005
22
803
Foreign cur- Allocations /
rency effect reversals
(27)
(51)
Other*
31/12/2006
(83)
642
* Essentialy, changes in consolidation perimeter.
Q
Non-capitalized deferred tax assets
31/12/2006
31/12/2005
Deferred tax on temporary differences
201
303
Deferred tax on deficits that can be carried foward
629
634
Deferred tax on unrecognized assets
830
937
The amount of deferred tax assets not recorded at 31 December 2006 amounted to 830 million euros. This corresponds principally
to tax liabilities that can be carried forward and which were not capitalized because their recovery was considered unlikely.
98
76
115
NOTE 18: INVESTMENT PROPERTIES
31/12/2006
31/12/2005
31/12/2004
Investment properties at gross value
534
561
628
Depreciation
(79)
(98)
(147)
Total
455
463
481
Q
Change in investment properties
Other movements correspond to investment properties
put into service (reclassification from fixed assets in progress
to investment property).
The changes are presented as follows:
Opening balance (01/01/2005)
481
Allowances for depreciation and amortization
for the period
(18)
Foreign currency effect
55
Investments in the period
38
Disposals in the period
Other movements
63
463
Allowances for depreciation and amortization
for the period
(17)
Foreign currency effect
(18)
Disposals in the period
Their fair value at 31 December 2006 was estimated at
550 million euros.
(155)
Closing balance (31/12/2005)
Investments in the period
Rental income generated by these investment properties
and recorded on the income statement in 2006 amounted
to 62.4 million euros.
40
(85)
Changes in consolidation perimeter
(81)
Other movements
153
Closing balance (31/12/2006)
455
NOTE 19: INVENTORIES
Inventories at gross value
Depreciation
Inventories at net value
31/12/2006
6,274
(223)
31/12/2005
6,365
(255)
31/12/2004
5,947
(326)
6,051
6,110
5,621
31/12/2006
31/12/2005
31/12/2004
NOTE 20: COMMERCIAL RECEIVABLES
Trade receivables
Depreciation on bad debts
Net receivables from customers
1,111
(156)
1,246
(143)
1,286
(150)
955
1,103
1,137
Supplier receivables
2,665
2,348
2,011
Total
3,620
3,451
3,147
Trade receivables are primarily those due from Group franchisees.
Supplier receivables correspond to rebates and commercial incentives receivable from the Group’s suppliers.
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NOTE 21: OTHER ASSETS
31/12/2006
31/12/2005
31/12/2004
Receivables from employees
20
16
15
Loans at less than 1 year
17
8
20
Receivables from the disposal of intangible,
tangible and financial assets
27
30
128
Prepaid expenses
202
192
149
Other net operating receivables
549
567
588
Total
815
813
900
31/12/2006
31/12/2005
31/12/2004
Cash equivalents
1,773
1,976
2,101
NOTE 22: CASH AND CASH EQUIVALENTS
Cash
1,924
1,756
1,102
Total
3,697
3,733
3,203
NOTE 23: PROVISIONS
(in millions
of euros)
Unused
Currever31/12/
Allow- Deprerency
sals
2004
ances ciation
impact
of provisions
Provisions
for retirement
benefits
732
3
68
Legal risk
704
92
Restructuring
143
4
After-sales
service
Other
Total
66
(40)
(61)
734
211
(60)
(58)
887
241
(2)
(149)
236
28
(25)
(47)
(174)
309
13
179
1,954
112
727
31
Used
Changes
Unused
reverin conso- Currever31/12/
Allow- Depresals
lidation rency
sals
2005
ances ciation
of properim- impact
of provisions
eter
visions
31
(7)
(2)
77
(14)
(2)
(76)
(58)
189
(63)
(43)
12
961
77
(62)
(83)
8
174
70
1
(59)
398
(7)
(2)
86
(327)
2 325
(13)
(20)
459
30
Used
rever31/12/
sals
Other
2006
of provisions
30
707
(33)
30
68
(17)
(40)
(72)
346
(218)
(257)
(52)
2,256
The cost of retirement indemnities is determined at the end of each fiscal year on the basis of employee seniority and the
probability of their continued employment by the company at retirement. The calculation is based on an actuarial method that
incorporates assumptions as to salary increases and retirement age. The commitment of the Group is entirely covered by provisions
and by payments to external agencies.
Other provisions are composed of risks directly related to the company’s operations (land-related risks, etc.).
In the normal course of business, the Group’s companies are involved in a certain number of legal proceedings or litigation, including
disputes with tax and social security authorities. A provision for contingency and loss has been established for expenses that can
be estimated with sufficient reliability and are deemed probable by the companies and their expert assessors.
100
76
115
Summary of the financial situation of defined benefit schemes in the Group’s three main countries (France, Italy and Belgium):
Breakdown of charges to 2006 income statement (in millions of euros)
Service costs
Total
10
Financial cost
35
Expected return on financial assets
(14)
Other
1
Total
32
Total
Balance sheet movements (in millions of euros)
Provision at 31/12/2005
656
Impact on income statement
33
Changes in the consolidation perimeter
8
Benefits paid
(45)
Other
(10)
Provision at 31/12/2006
641
Change in fair value of hedging assets (in millions of euros)
Total
Fair value at 31/12/2005
290
Changes in the consolidation perimeter
1
Expected return
14
Benefits paid by the fund
(6)
Actuarial losses
(5)
Other
13
Fair value at 31/12/2006
308
Net obligation (in millions of euros)
Total
Provision
641
Fair value of hedging assets
308
Defined Benefits Obligations (DBO)
950
Unrecognized actuarial adjustments
25
Net obligation at 31/12/2006
975
The criteria are as follows:
Age of retirement
Increases in salaries
Salary expense rate
Discount rate
60-65 years
1.4% to 3.2%
7% to 35%
3.9% to 4.25%
101
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NOTE 24: OTHER LIABILITIES
Long-term liabilities (with the exception of provisions) are not discounted, as the effect of discounting on the financial statements
would be insignificant.
Trade payables for fixed assets
Payables to employees
Prepaid income
Other liabilities
31/12/2006
31/12/2005
31/12/2004
890
749
623
1,552
1,519
1,417
86
103
61
382
651
851
2,910
3,022
2,952
31/12/2006
31/12/2005
31/12/2004
7,839
7,737
7,280
Derivatives - liabilities
489
320
Other borrowings
657
1,329
1,459
79
162
186
Commercial paper
460
520
577
Leasing
481
455
470
10,006
10,523
9,972
Total restatement of borrowings*
9,939
10,497
9,972
Marketable securities
1,707
1,950
2,101
66
26
Cash
1,924
1,756
1,102
Total investments
3,697
3,733
3,203
Net debt
6,309
6,790
6,770
Total
NOTE 25: BORROWINGS
Q
Breakdown of net debt:
Bonds
Other long-term debts
Total borrowings
Derivatives - assets
* Amount of borrowing restated to include the derivatives shown as assets in the balance sheet.
IAS standards 32 and 39 pertaining to financial instruments were applied as of 1 January 2005. Only the financial statements at
31 December 2004 are not impacted by the application of these standards, which explains why the fair value of derivatives in
the balance sheet is nil at 31 December 2004.
Based on equivalent accounting principles (by applying IAS 32 and 39 to the 2004 accounts), the Group’s net debt would have
been 7,546 million euros at the end of 2004.
Q
Breakdown of borrowings by interest rate type
31/12/2006
31/12/2005
31/12/2004
Fixed rate debt
8,212
7,677
5,877
Floating rate debt
1,727
2,820
4,095
Total
9,939
10,497
9,972
Floating-rate debt was either issued as such or swapped to floating-rate debt from fixed-rate debt on issuance.
102
76
Q
115
Breakdown of borrowings by currency
Borrowings are shown in their currency after the impact of hedging.
31/12/2006
31/12/2005
31/12/2004
9,352
10,041
8,317
Japanese yen
0
0
170
US dollar
1
8
Brazilian real
92
7
1
Chinese yuan
50
32
10
3
48
7
Taiwanese dollar
112
35
16
Malaysian ringgit
2
2
10
18
43
145
Euro
Turkish lira
Argentine peso
Pound sterling
0
0
796
97
114
362
150
21
11
Thai baht
4
12
Polish zloty
8
8
50
0
Korean won
0
125
120
Other
0
0
5
9,939
10,497
9,972
Swiss franc
Colombian peso
Cypriot pound
Total
1
The debt in euros represented 83.4% of the total in December 2006, as against 85.5% in December 2005.
After swaps, the debt in euros represented 94% of total debt in December 2006.
Q
Breakdown of bonds
Maturity date
Bonds
Amount
7,839
Public issues
6,313
Bond Euro MTN, GBP, 10 years, 5.375%
2012
796
Bond Euro MTN, EUR, 8 years, 4.375%
2011
1,100
Bond Euro MTN, EUR, 2.5 years, 6.125%
2010
1,000
Bond, FRF, 10 years, 4.500%
2009
1,000
Bond, FRF, 10 years, 5.300%
2008
305
2008
500
Bond Euro MTN, CHF, 8 years, 3.500%
2007
162
2013
750
2015
50
2015
50
2016
600
Private issues
1,527
The fair values, both assets and liabilities, of the derivatives have been incorporated into bonds (66 million in the case of derivative
assets and 489 million in the case of derivative liabilities).
103
61
Q
61
Management Report
70
Breakdown of borrowings by maturity date
31/12/2006
31/12/2005
31/12/2004
1 year
2,408
2,895
2,632
2 years
1,007
1,008
1,071
3 to 5 years
3,462
3,191
2,787
Over 5 years
2,571
3,130
3,221
492
273
261
9,939
10,497
9,972
Unspecified
Total
Q
Bank covenants
At 31 December 2006, the Group had no bank covenants.
NOTE 26: FINANCIAL INSTRUMENTS
The principle used to define fair value is indicated in Note 1.
Q
Market value of financial assets and liabilities
31/12/2006
Nominal
value
Net book
value
Investments
296
Other long-term financial
assets (mainly deposits
and guarantees)
31/12/2005
Fair value
Nominal
value
Net book
value
296
296
283
841
841
841
Consumer credit from
financial companies
4,242
4,242
Operating receivables
5,012
Cash and marketable
securities
3,697
Fair value
Net book
value
Fair value
283
283
538
538
538
892
892
892
603
603
603
4,242
3,755
3,755
3,755
3,221
3,221
3,221
5,012
5,012
5,021
5,021
5,021
4,471
4,471
4,471
3,697
3,697
3,733
3,733
3,733
3,203
3,203
3,203
14
14
Currency derivatives
Borrowings
31/12/2004
Nominal
value
(20)
(20)
9,939
10,068
10,100
10,497
10,596
11,329
9,661
9,972
10,221
Debt hedged for fair value
1,031
1,107
1,107
1,031
1,082
1,082
1,344
1,466
1,466
Debt hedged for cash flow
425
425
425
825
825
825
1,455
1,455
1,455
8,484
8,484
8,515
8,642
8,642
9,374
6,862
6,862
7,111
53
53
48
48
189
189
Including:
Unhedged debt
Interest rate derivatives
104
76
Q
115
Market value of derivatives
31/12/2006
Fair value
31/12/2005
Notional
Fair value
31/12/2004
Notional
Fair value
Notional
Cash flow hedge instruments
Interest rate risk
Swaps
5
400
2
550
(3)
1,730
2
116
(4)
156
(11)
94
1,031
(51)
1,531
(131)
2,664
4
5
(9)
59
(10)
79
19
11,649
13,742
(55)
10,449
Options
Currency instruments
Currency swaps
Forward contracts
Options
Other
Fair value hedge instruments
Interest rate risk
Swaps
(76)
Options
Currency instruments
Currency swaps
Forward contracts
Options
Other
Instruments held for transaction purposes
Currency derivatives
Interest rate derivatives
2
Other
NOTE 27: EVENTS POST YEAR-END
NOTE 28: CONTINGENT LIABILITIES
No significant event has occurred since the date of the closing
of the accounts that could alter the relevance of the information
presented above.
In the context of the everyday management of its activities,
the Group is subject to litigation or disputes that it believes will
not give rise to any significant expenses or have a significant
impact on its financial situation, its business and/or its results.
NOTE 29: OFF-BALANCE SHEET COMMITMENTS
The commitments made and received by the Group that have
not been recorded on the balance sheet correspond to
contractual obligations that have not yet been executed and
are dependent on the fulfilment of conditions or operations
subsequent to the year in progress. These commitments are
of three sorts: relating to cash flow, relating to the operation
of sales outlets and relating to securities acquisitions.
Furthermore, the Group has rental contracts (mainly for rents
payable on leased sales outlets and rents receivable from its
shopping mall stores) that also represent future commitments,
either given or received.
1. Off-balance sheet commitments
related to funds consist of:
Q
lines of credit that can be brought into play, representing
confirmed lines of credit made available to the Group and
not yet used at the date of closing of the accounts;
Q
collateral and mortgages given or received mainly within the
context of the Group’s real estate operations;
Q
credit commitments given by the Group’s financial service
companies to their customers as part of their operating activities,
as well as bank commitments received.
105
61
61
Management Report
2. Off-balance sheet commitments
related to operations consist of:
Q
commitments to purchase plots of land under the Group’s
expansion programme;
Q
various undertakings arising from commercial contracts;
Q
undertakings made for carrying out construction work as
part of the Group’s expansion programme;
Q
rental guarantees and guarantees on shopping mall
operators;
Q
guarantees for receivables;
Q
as well as other commitments given or received.
3. Commitments related to the acquisition
of securities consist of:
Q
firm commitments received to purchase or sell securities
mainly in France, with regard to the Group’s franchising
activity;
Q
plus options to purchase securities and liability guarantees.
Liability guarantees received are not disclosed.
Q
Commitments given
Relating to funds
4. Commitments related to leasing agreements
At the end of December 2006, the Group fully owned
556 hypermarkets out of 963 consolidated hypermarkets,
622 supermarkets out of 1,479 consolidated supermarkets and
405 hard discount stores out of 4,574 consolidated hard
discount stores.
Stores not fully owned are rented under leasing agreements
that represented an expense of 871 million euros over the year
2006 (see Note 7).
Of these contracts, 15% expire in less than one year, 36% in
1 to 5 years and 50% in more than 5 years. The gross amount
of future rental payments, determined on the basis of the
maximum future commitment made by the Group, both in
terms of duration and amount, for each of the property leasing
agreements existing to date, amounts to 6,090 million euros.
The discounted future rental flow corresponds to a commitment
of 4,621 million euros.
The Group also owns shopping malls, mainly anchored by its
hypermarkets and supermarkets, that are rented out and that,
in 2006, represented an income of 215 million euros. The gross
amount of future rental payments receivable, dependent on
the future commitment made by lessees, both in terms of the
duration and amount of each property rental lease agreement
existing to date, amounts to 288 million euros. The discounted
future rental flow corresponds to a commitment received of
268 million euros.
December
2006
Breakdown by maturity
- 1 year
1 to 5 years
+ 5 years
6,388
2,130
3,357
901
relating to financial companies
4,132
1,660
2,452
20
relating to other companies
2,256
469
905
881
Relating to operation/property/expansion
1,004
310
565
129
Relating to acquisitions of securities
2,540
670
1,708
162
Relating to lease agreements
6,090
842
2,102
3,146
16,022
3,952
7,732
4,339
Total
Q
Commitments received
Relating to funds
Breakdown by maturity
December
2006
- 1 year
1 to 5 years
+ 5 years
7,235
2,666
2,862
1,707
relating to financial companies
1,439
533
876
30
relating to other companies
5,796
2,133
1,986
1,677
Relating to operation/property/expansion
782
168
470
143
Relating to acquisitions of securities
178
2
28
148
Relating to lease agreements
288
128
113
47
8,483
2,964
3,473
2,046
Total
106
70
76
115
NOTE 30: EMPLOYEES
31/12/2006
31/12/2005
31/12/2004
Average number of Group employees
434,205
417,258
409,964
Group employees at year end
456,295
440,479
430,695
* Excluding Prodirest.
NOTE 31: AFFILIATED PARTIES
The remuneration for the year 2006 paid to members of the Group’s Management Committee (excluding the Management
Board) amounted to 7,957,548 euros.
Information on the remuneration of corporate officers is provided in the management report of the Management Board.
Transactions between the parent company and equity affiliates are summarized below:
Transaction amounts
Receivables from
affiliated companies
2006
2005
2004
2006
2005
2004
2
365
354
1
50
54
Payables to affiliated
companies
2006
2005
2004
Off-balance sheet
commitments
2006
2005
1,049
1,379
84
87
2004
Nature of transaction
Sale of goods
Commitments given:
Firm commitments
to purchase securities
Commitments received:
Firm commitments
to purchase securities
Other
(38)
36
27
9
11
(7)
2
1
96
116
At 31 December 2005, the Hyparlo company was consolidated by the equity method. It is now fully consolidated, which explains
the decrease in transactions of affiliates in 2006.
107
61
Q
61
70
Companies consolidated by full integration at 31 december 2006
France
ACTIS
ALFROY
ALIMENTAIRE SCORE
ALODIS
ANDELYSIENNE DE DISTRIBUTION
ANDRENA
ANIFLORE
ANNONAY DISTRIBUTION
ARDAN
ARLCO2
AUCEMA
AUREJAN
BCG
BDD
BEARBULL
BIGOURDANE DE DISTRIBUTION
BOEDIM
BREAL DISTRIBUTION
BRIMONT
BRUMAT
CADS
CAMARSYL
CARAUTOROUTES
CARBAS
CARCOOP
CARCOOP FRANCE
CARFUEL
CARMA
CARMA VIE
CARMIN
CARREFOUR ADMINISTRATIF FRANCE
CARREFOUR ASSISTANCE À DOMICILE
CARREFOUR AUTOROUTES (EX COVICAR 6)
CARREFOUR EUROPE
CARREFOUR FORMATION HYPERMARCHÉS FRANCE (CFHF)
CARREFOUR FRANCE
CARREFOUR HYPERMARCHÉS
CARREFOUR HYPERMARCHÉS FRANCE
CARREFOUR IMPORT SAS ( EX CRFP2)
CARREFOUR MANAGEMENT
CARREFOUR MARCHANDISES INTERNATIONALES
CARREFOUR MOBILIER HYPERMARCHÉS FRANCE
CARREFOUR MONACO
CARREFOUR PROPERTY
CARREFOUR SA
CARREFOUR SERVICES CLIENTS
CARREFOUR SYSTEMES D’INFORMATIONS FRANCE
CARREFOUR VACANCES
CARTAILLAN
CASCH
CASMF
CDA
CDM
CHAMNORD
CHAMPION SUPERMARCHÉS FRANCE (C.S.F)
CHRISTHALIE
CHRISTING
CLAIREFONTAINE
CLEMADIS
CLERGIDIS
CM SUPERMARCHÉS SUD-EST CMSSE
COJADIS
COMIDIS
108
Management Report
Percentage interests
used in consolidation
Commercial Business
Register number
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
98.3
99.9
100.0
100.0
100.0
98.3
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
50.0
50.0
100.0
50.0
50.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
63.6
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
345 274 310
398 260 950
333 708 014
345 130 306
384 418 331
339 363 095
418 453 007
310 380 621
408 857 142
478 975 220
398 656 660
409 581 154
347 514 895
380 060 210
423 143 718
334 570 298
379 874 571
432 807 550
423 291 731
337 730 683
353 110 554
443 499 041
433 970 944
440 590 222
317 599 231
333 955 912
306 094 194
330 598 616
428 798 136
392 312 898
428 240 352
487 596 173
451 321 194
420 265 845
433 970 811
672 050 085
451 321 335
428 767 859
434 212 130
403 245 061
385 171 582
433 970 886
92 502 820
775 632 169
652 014 051
423 697 523
433 929 114
379 601 974
447 729 815
444 531 180
444 531 388
342 416 005
379 959 257
303 543 128
440 283 752
344 389 820
330 305 558
326 964 715
439 872 979
422 909 937
421 063 256
445 018 633
333 903 789
76
Q
115
COMPAGNIE D’ACTIVITÉ ET DE COMMERCE INTERNATIONAL -CACICOMPTOIRS MODERNES SAS (CMSAS)
CONTINENT 2001
CONTINENT FRANCE
COSG
COVICAR 2
CRFP1
CRFP10
CRFP11
CRFP12
CRFP4
CROIX DAMPIERRE
CSD
CSD TRANSPORTS
CUBZADIS
DALCINE
DARTAGNAN
DAUPHINOISE DE PARTICIPATIONS
DAVARD
DDAPS
DÉFENSE ORLÉANAISE
DES BIHOURDES
DIONYESIENNE DE SUPERMARCHÉS
DISANIS
DISTRABAUD
DISTRAL
DISTRAL AYZAC
DISTRIVAL
DOP 4
DTH DISTRIBUTION
DU MOULIN
DUO CONTI
ED FRANCHISÉ SAS
ED SAS
ERTECO
ESCALA
ESQUIEZIENNE DE SUPERMARCHÉS (S.E.S)
ETADIS
ETS CATTEAU
EUROMARCHÉ
FINARLO
FINIFAC
FORMADIS
FORUM DÉVELOPPEMENT
GEDEL
GEFIDIS
GENEDIS
GILVER
GML - GRANDS MAGASINS LABRUYERE
GML FRANCE
GOUDY
GUALEX
GUIROVI
HALLDIS
HAMON
HAMON INVEST
HAUTS DE ROYA
HERVAU
HOFIDIS II
HONDIS
HYPARLO FRANCE
HYPARLO SA
IMMOBILIERE CARREFOUR
IMMOBILIERE ERTECO SNC
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
75.0
91.6
74.0
74.0
100.0
100.0
99.9
100.0
100.0
100.0
50.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
98.3
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
98.3
100.0
100.0
100.0
100.0
100.0
50.0
50.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
98.3
100.0
100.0
Commercial Business
Register number
352 860 084
575 450 317
430 209 650
430 209 288
440 091 114
440 274 454
434 210 985
444 531 628
444 531 719
444 531 750
440 160 570
780 680 781
326 220 654
433 859 154
353 125 255
384 776 902
339 211 450
337 748 552
333 940 120
383 946 795
085 580 728
428 082 218
397 728 122
418 544 516
402 068 456
331 057 075
381 342 831
383 257 938
345 130 520
418 818 985
379 967 136
433 805 124
434 193 454
381 548 791
303 477 038
419 671 979
332 136 050
440 274 355
576 280 101
780 060 414
408 371 649
409 468 857
391 490 133
381 485 176
395 104 243
345 180 632
345 130 512
382 944 684
314 832 387
397 894 296
353 898 125
398 334 649
381 618 461
391 982 980
622 007 821
431 586 502
428 470 900
353 869 662
423 143 718
437 939 952
439 916 677
779 636 174
323 439 786
389 526 617
109
61
Q
Management Report
70
IMMODIS (HYPARLO)
IMMODIS
INTERDIS
JAPIERRE
JBM HOLDING
JORI
JULIEME
KERISPER
KERRIS
LA BURRIÈRE
LA CIOTAT DISTRIIBUTION SNC
LA LAUFA
LA VOULTE DISTRIBUTION
LALAUDIS
LAMBIN
LAPALUS & FILS (ETABS)
LE RELAIS DE CARIMAI
LEDAYE
LES REMPARTS
LOGIDIS
LOGIDIS COMPTOIRS MODERNES
LORDIS
LUDIS
MAISON JOHANES BOUBÉE
MANDY
MANOLY
MAPILO
MARJORIE
MATEDIS
MIBILCO
MONDEVILLE 1
MONTEL DISTRIBUTION
MONTEL HOLDING
MONTELIMAR DISTRIBUTION
MONTVERT
NEUVILLE DISTRIBUTION
NEUVYDIS
NOISY DISTRIBUTION
OGALIM
OOSHOP
P.R.M.
PARADICE
PARFIDIS
PARIDIS 75
PERPIGNAN DISTRIBUTION SNC
PHILEVE
PLOUHADIS
POLE
PONTORSON DISTRIBUTION
PRINTANIA
PRODIM
PROFIDIS
PROFIDIS & CIE
PROGHI
PROPO
PROVIDANGE
PYRENNENNE DE SUPERMARCHÉS (S.P.S)
RIOMOISE DE DISTRIBUTION SA
ROCHEDIS
S 2M I
S.D.O
S.L.M. DISTRIBUTION
S.T.D.
S2P - SOCIÉTÉ DES PAIEMENTS PASS
110
61
98.3
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
99.0
100.0
100.0
100.0
99.9
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
99.9
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
95.0
100.0
100.0
98.3
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
99.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
60.0
Commercial Business
Register number
334 440 849
950 340 927
421 437 591
325 774 338
401 634 852
350 832 267
392 746 194
323 635 367
340 382 548
433 511 045
451 625 354
347 465 528
391 571 312
339 176 885
341 092 609
795 920 172
420 047 938
333 585 354
389 347 063
303 010 789
428 240 287
430 160 010
345 316 855
775 583 248
319 449 708
331 171 223
327 788 105
347 619 645
383 230 703
347 737 157
422 382 051
398 834 226
007 050 107
487 596 165
379 843 139
439 525 148
351 715 537
350 498 416
348 302 613
420 153 538
352 442 826
349 246 280
398 160 234
451 321 376
451603070
347 970 592
385 254 370
341 455 855
352 725 808
321 276 065
345 130 488
323 514 406
327 753 372
434 272 845
410 690 101
352 367 239
331 140 707
318 623 790
352 057 046
440 272 789
487 280 307
453 585 101
417 597 549
313 811 515
76
Q
115
SAB
SACIR
SADAP
SAINT ROMAIN DISTRIBUTION
SAPER
SARL DE SAINT HERMENTAIRE
SARL ERTECO EST
SAUDIS
SCI POUR LE COMMERCE
SCI SOGARA MERIGNAC
SDAG
SEGODIS
SELIMA
SET
SHF
SIFO
SIGER
SISP
SMSM
SNC ED EST
SNE & CIE - SOCIÉTÉ NOUVELLE D’EXPLOITATION
SOBEDIS
SOCAMAG
SOCIÉTÉ DE DISTRIBUTION PLOEUCOISE - SODIP
SOCIÉTÉ DES HYPERMARCHÉS DE LA VEZERE
SOCIÉTÉ D’EXPLOITATION AMIDIS & CIE
SOCIÉTÉ FECAMPOISE DE SUPERMARCHÉS
SOCIÉTÉ NOUVELLE DES MAGASINS ED
SOCIÉTÉ NOUVELLE SOGARA
SODIALP
SODICO
SODIGIR
SODILOC
SODISCAF
SODISOR
SODITA
SOECUDIS
SOFEDIS
SOFIDIM
SOFIDIS
SOFINEDIS
SOFRED
SOGADIS
SOGARA
SOGARA FRANCE
SOGIPIC
SOGRIN
SOJUDIS
SOLADIS
SOPLANDI
SOVAL
STEMA
STOC SUD-EST - STOC S.E.
STROFI
SUESCUN
SUPER ALBA
TAVERDIS
TERRADIS
THOMAS DISTRIBUTION
TILLY DISTRIBUTION
TOURANGELLE DE PARTICIPATIONS
VALDIS
VEZERE DISTRIBUTION
VLS DISTRIBUTION (SUPERMARCHÉ SCHALLER)
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
50.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
50.0
100.0
100.0
100.0
50.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
50.0
50.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Commercial Business
Register number
419 278 270
775 598 394
351 546 734
403 730 112
348 841 305
384 235 602
401 636 550
338 625 759
378 384 002
307 048 975
006 150 163
311 510 432
411 495 369
433 964 202
387 520 711
401 321 344
377 649 421
349 146 878
329 275 978
402 628 283
388 182 388
308 250 240
423 938 042
325 517 464
382 824 761
319 730 339
305 490 039
352 730 816
441 037 405
324 766 047
338 008 162
389 504 291
382 005 916
398 008 565
788 358 588
482 053 352
389 551 508
317 516 441
673 820 601
388 586 505
304 515 380
342 213 253
321 357 543
662 720 341
397 509 647
400 881 058
325 663 771
316 701 309
345 027 171
392 435 905
847 250 503
440 068 625
398 155 606
421 892 134
340 023 936
325 183 655
350 621 652
331 015 958
394 183 040
350 553 517
339 487 787
347 381 196
478 502 651
340 468 321
111
61
Q
61
Management Report
70
Percentage
interests
112
Argentina
BANCO CETELEM ARGENTINA SA
BANCO DE SERVICIOS FINANCIEROS SA
CARREFOUR AMERICAS
CARREFOUR ARGENTINA SA
DIA ARGENTINA SA
SUPERMERCADOS NORTE
TIGA S.A.
40.0
60.0
100.0
100.0
100.0
100.0
100.0
Belgium
ALL IN FOOD
ANDIS
BIGG’S - CONTINENT NOORD SA
BIGG’S SA
CARGOVIL (EX OUTEX)
CARREFOUR BELGIUM
CARUM
CENTRE DE COORDINATION CARREFOUR
CUSTOMER LOYALTY PROGRAM BELGIUM - CLPB
DAVO
DE NETELAAR
DIKON
DIZO
ECLAIR
EXTENSION BEL-TEX
FIFO
FILMAR
FILUNIC
FIMASER
FOMAR
FOURCAR BELGIUM SA
FRESHFOOD
FRESHMAR
GB RETAIL ASSOCIATES SA
GIB MANAGEMENT SERVICES
GMR
GROSFRUIT
MABE
MULTI STORE
NORTHSHORE PARTICIPATION
PLUSMARKT
R&D FOOD
ROB
ROTHIDI
RULUK
SAMDIS
SCHILCO
SERCAR
SINDIS
SIVVO
SOCIÉTÉ RELAIS
SOUTH MED INVESTMENTS
STIGAM
TECHNICAL MAINTENANCE SERVICE - TMS
VERSMARKT
VEVO
VOMARKT
WAPRO
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
97.1
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
60.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
78.8
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Percentage
interests
Brazil
AUTO POSTO PIMPOLHO LTDA
BREPA COMERCIO PARTICIPACAO LTDA
CARREFOUR ADMINISTRADORA DE CARTOES DE
CREDITO, COMERCIO E PARTICIPACOES LTDA
CARREFOUR AMERICAS LTDA
CARREFOUR COMMERCIO E INDUSTRIA LTDA
CARREFOUR GALERIAS COMERCIAIS LTDA
CARREFOUR PARTICIPACOES SA
CARREFOUR REVENDEDORA DE COMBUSTIVEIS LTDA.
CARREFOUR VIAGENS E TURISMO LTDA.
CONSENSUS COMÉRCIO VAREJISTA DE PRODUTOS
ALIMENTÍCIOS LTDA.
DIA BRASIL
ELDORADO
IMOPAR PARTICIPCOES E ADMINISTRACAO
IMOBILIARIA LTDA
LOJIPART PARTICIPACOES SA
MAUA PARTICIPACOES
NOVA GAULE COMERCIO E PARTICIPACOES S.A.
NTC TRADING S/A
POSTO DE COMBUSTÍVEL ZONA NORTE
POSTO DE SERVIÇOS NAOMIS LTDA
RDC FACCOR FACTORING FOMENTO COMERCIAL LTDA.
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Bulgaria
CARREFOUR BULGARIA AD
100.0
China
BEIJING CARREFOUR COMMERCIAL CO., LTD.
BEIJING CHAMPION SHOULIAN COMMUNITY CHAIN
STORES CO LTD
BEIJING CHUANGYIJIA CARREFOUR COMMERCIAL
BEIJING DIA-SHOULIAN COMMERCIAL RETAIL CO. LTD
BEIJING REPRESENTATIVE OFFICE OF CARREFOUR S.A.
CARREFOUR (CHINA) FOUNDATION
CARREFOUR (CHINA) MANAGEMENT
& CONSULTING SERVICES CO.
CHANGSHA CARREFOUR HYPERMARKET
CHENGDU CARREFOUR HYPERMARKET CO LTD
CHENGDU YUSHENG INDUSTRIAL DEVELOPMENT CO LTD
CHONGQING CARREFOUR COMMERCIAL CO LTD
DALIAN CARREFOUR COMMERCIAL CO., LTD.
DIA TIANTIAN (SHANGHAI) MANAGEMENT
CONSULTING SERVICE CO. LTD
DONGGUAN CARREFOUR COMMERCIAL CO., LTD
DONGGUAN DONESHENG SUPERMARKET CO
FUZHOU CARREFOUR COMMERCIAL CO LTD
GUANGZHOU JIAGUANG SUPERMARKET CO
HAIKOU CARREFOUR COMMERCIAL
HANGZHOU CARREFOUR HYPERMARKET CO., LTD
HARBIN CARREFOUR HYPERMARKET CO., LTD
HEFEI YUEJIA COMMERCIAL CO., LTD.
JINAN CARREFOUR COMMERCIAL CO., LTD
KUNMING CARREFOUR HYPERMARKET CO., LTD
NANJING YUEJIA SUPERMARKET CO LTD
NINGBO CARREFOUR COMMERCIAL
NINGBO LEFU INDUSTRIAL DEVELOPMENT CO. LTD
QINGDAO CARREFOUR COMMERCIAL
SHANGAI CARHUA SUPERMARKET LTD
100.0
100.0
60.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
55.0
100.0
100.0
87.4
100.0
100.0
100.0
100.0
92.5
100.0
55.0
65.0
100.0
100.0
100.0
65.0
55.0
100.0
65.0
65.0
60.0
100.0
100.0
65.0
60.0
100.0
97.7
55.0
76
Q
115
Percentage
interests
China (continued)
SHANGHAI DIA-LIAN HUA RETAIL CO. LTD
SHENYANG CARREFOUR COMMERCIAL CO LTD
SHENZHEN CARREFOUR COMMERCIAL
SHENZHEN LERONG SUPERMARKET CO LTD
SUZHOU YUEJIA SUPERMARKET CO., LTD
TIANJIN FUYE COMMERCIAL CO., LTD.
TIANJIN QUANYE CARREFOUR HYPERMARKET CO., LTD
WUHAN HANFU CHAIN SUPERMARKET CO LTD
WUXI YUEFU COMMERCIAL CO., LTD.
XIAMEN CARREFOUR COMMERCIAL CO LTD
XIAN CARREFOUR HYPERMARKET CO LTD
XINJIANG CARREFOUR HYPERMARKET
XUZHOU YUEJIA COMMERCIAL CO LTD
ZHENGZHOU YUEJIA COMMERCIAL CO., LTD.
ZHUHAI LETIN SUPERMARKET CO., LTD.
55.0
65.0
100.0
100.0
55.0
55.0
65.0
100.0
60.0
100.0
100.0
100.0
60.0
60.0
100.0
Colombia
GSC SA - GRANDES SUPERFICIES DE COLOMBIA
100.0
Czech republic
ALFA SHOPPING CENTER
SHOPPING CENTRE KRALOVO POLE
USTI NAD LABEM SHOPPING CENTER
100.0
100.0
100.0
Germany
ERTECO DEUTSCHLAND GMBH
PROMOHYPERMARKT AG & CO. KG
Greece
CARREFOUR MARINOPOULOS
DIA HELLAS
GUEDO Holding Ltd.
XYNOS SA
100.0
100.0
50.0
80.0
25.1
50.0
Hong Kong
CARREFOUR ASIA LTD
CARREFOUR GLOBAL SOURCING ASIA
CARREFOUR TRADING ASIA LTD (CTA)
VICOUR LIMITED
100.0
100.0
100.0
100.0
Indonesia
PT CARREFOUR INDONESIA (EX CONTIMAS)
100.0
Irland
CARREFOUR INSURANCE
100.0
Italy
CARREFOUR DISTRIBUZIONE SRL
(EX CONSORZIO CARREFOUR)
CARREFOUR ITALIA
CARREFOUR ITALIA IMMOBILIARE
CARREFOUR SERVIZI FINANZIARI SPA
DEMETER ITALIA SPA (EX HYPERMARKET HOLDING)
DI PER DI SRL
ERTECO ITALIA SRL
ETNASTORE SPA
FINMAR SPA
GS SpA (EX ATENA)
LOGIDIS ITALIA SRL
MIRTO 92
NUOVA CV
NUOVA DM
99.8
100.0
99.8
60.0
99.8
99.8
99.8
59.9
99.8
99.8
99.8
99.8
99.8
99.8
Percentage
interests
Italy (continued)
NUOVA DP
NUOVA DSL
NUOVA SD
S.L.I.D.I. SRL
SOCIETA SVILUPPO COMMERCIALE
SVILUPPO ALIMENTARE SRL
TREDI’ ESPANSIONE SRL
99.8
99.8
99.8
99.8
99.8
99.8
99.8
Malaysia
CARREFOUR MALAYSIA SDN BHD
MAGNIFICIENT DIAGRAPH SDN-BHD
100.0
100.0
Poland
CARREFOUR POLSKA
CARREFOUR POLSKA PROPER
CARREFOUR POLSKA WAW
100.0
100.0
100.0
Portugal
CARREFOUR (PORTUGAL)
DIA PORTUGAL SUPERMERCADOS
99.9
100.0
Roumania
HIPROMA
98.3
Singapore
CARREFOUR SINGAPOUR PTE LTD
CARREFOUR SOUTH EAST ASIA
100.0
100.0
Slovakia
ATERAITA
CARREFOUR SLOVENSKO
100.0
100.0
Spain
CARREFOUR CANARIAS, S.A.
CARREFOUR ESPANA PROPERTIES, S.L.
CARREFOUR NAVARRA, S.L.
CARREFOUR NORTE, S.L.
CARREFOURONLINE S.L (SUBMARINO HISPANIA)
CENTROS COMERCIALES CARREFOUR, S.A.
CORREDURIA DE SEGUROS CARREFOUR
DISTRIBUIDORA INTERNACIONAL DE ALIMENTACION
(DIASA)
FINANDIA E.F.C.
GROUP SUPECO MAXOR
IMMOBILARIA CARREFOUR
INVERSIONES PRYCA, S.A.
NORFIN HOLDER S.L
SERVICIOS FINANCIEROS CARREFOUR EF.C.
(FINANCIERA PRYCA)
SIDAMSA CONTINENTE HIPERMERCADOS, S.A.
SOCIEDAD DE COMPRAS MODERNAS, S.A. ( SOCOMO)
SUPERMERCADOS CHAMPION, S.A.
VIAJES CARREFOUR, S.L.UNIPERSONAL
Switzerland
ALPIROSA
CARREFOUR SUISSE
CARREFOUR WORLD TRADE
DISTRIBUTIS SA
HYPERDEMA (PHS)
PROMOHYPERMARKT AG (PHS)
95.9
95.9
95.9
95.9
95.9
95.9
71.9
100.0
100.0
95.9
67.1
100.0
100.0
57.7
100.0
95.9
95.9
95.9
100.0
100.0
100.0
50.0
100.0
100.0
113
61
Q
61
Management Report
70
Percentage
interests
Taiwan
CARREFOUR FINANCIAL CONSULTING
CARREFOUR STORES TAIWAN CO
CHARNG YANG DEVELOPMENT CO
PRESICARRE
60.0
60.0
30.0
60.0
Thailand
CENCAR LTD
NAVA NAKARINTR LTD
SSCP THAILAND LTD
100.0
100.0
100.0
The Netherlands
ALCYON BV
CADAM BV
CARREFOUR CHINA HOLDINGS BV
CARREFOUR INTERNATIONAL SERVICES BV
(HYPER GERMANY HOLDING BV)
CARREFOUR NEDERLAND BV
CARRETSTRAAT BV
Q
95.9
100.0
100.0
100.0
100.0
100.0
Percentage
interests
The Netherlands (continued)
EUROPE TRADING COMPANY (ETC)
FOURCAR BV
FOURET BV
FRANCOFIN BV
HOFIDIS INVESTMENT AND FINANCE INTERNATIONAL (HIFI)
HYPER GERMANY BV
HYPER INVEST BV
INTERCROSSROADS BV
KRUISDAM BV
MILDEW BV
ONESIA BV
SOCA BV
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Turkey
CARREFOUR SABANCI TICARET MERKEZI AS
CARREFOURSA
DIA SABANCI SUPERMARKETLERI TICARET ANONIM SIRKETI
58.2
60.0
Companies consolidated by equity method at 31 december 2006
Percentage interests used in consolidation
France
ALTIS
DISTRIMAG
HYPERMARCHÉS DES 2 MERS - H2M
PROVENCIA SA
SA BLADIS
SCI LATOUR
SOCIÉTÉ RESEAU FRANCE BILLET
SOCIÉTÉ SUPERMARCHE DU BASSIN - SSB
Commercial Business Register number
50.0
50.0
50.0
50.0
33.3
60.0
45.0
50.0
310 710 223
301 970 471
393 248 554
326 521 002
401 298 583
333 337 053
414 948 638
324 754 894
Argentina
HIPERBROKER
Brazil
AGROPECUARIA LABRUNIER LTDA
AGROPECUARIA ORGANICA DO VALE
AGROPECUARIA VALE DAS UVAS SARL
FAZENDA SAO MARCELO SA
Italy
CARREFOUR ITALIA MOBILE SRL
FINIPER SPA
IL BOSCO SRL
IPER ORIO SPA
IPER PESCARA SPA
PEGASO SPA
114
65.0
100.0
82.5
100.0
100.0
50.0
20.0
39.9
49.9
49.9
48.9
Spain
COSTASOL DE HIPERMERCADOS, S.L.
DIAGONAL PARKING, S.C.
FEU VERT IBÉRICA, S.A.
GLORIAS PARKING S.A.
ILITURGITANA DE HIPERMERCADOS, S.L.
INTERING SA
SICIONE, S.A.
32.6
55.1
47.9
47.9
32.6
47.9
33.1
Switzerland
DISTRIBUTIS MONCOR SA
25.0
76
115
STATUTORY AUDITORS’ REPORT
ON THE CONSOLIDATED FINANCIAL STATEMENTS
Year ended 31 December 2006
II. Justification of our assessments
To the Shareholders,
In accordance with the requirements of article L.823-9 of the
French Commercial Code (Code de commerce) relating to
the justification of our assessments, we bring to your attention
the following matters: at each consolidated balance sheet
date, the Company systematically performs a goodwill
impairment test, in accordance with the method described in
Note 1 of the Notes to the consolidated financial statements.
We have examined the methodology of implementation of
this impairment test, as well as the cash flow forecasts and the
assumptions used and we have verified that Note 1 of the Notes
to the consolidated financial statements provides appropriate
information.
In accordance with our appointment as statutory auditors by
your Annual General Meeting, we have audited the
accompanying consolidated financial statements of Carrefour
S.A. for the year ended 31 December 2006.
The consolidated financial statements have been approved
by the Management Board. Our role is to express an opinion
on these financial statements based on our audit.
I. Opinion on the consolidated financial statements
We conducted our audit in accordance with professional
standards applicable in France. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are free
of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
the management, as well as evaluating the overall financial
statements presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, the consolidated financial statements give a
true and fair view of the assets and liabilities, of the financial
position of the Group as at 31 December 2006 and of the results
of its operations for the year then ended in accordance with
IFRS as adopted in the European Union.
The assessments were made in the context of our audit of the
consolidated financial statements taken as a whole, and
therefore contributed to the opinion we formed which is
expressed in the first part of this report.
III. Specific verification
In accordance with professional standards applicable in
France, we have also verified the information given in the
group’s management report. We have no matters to report
as to its fair presentation and its consistency with the
consolidated financial statements..
Paris-La Défense and Neuilly-sur-Seine, 4 April 2007
The Statutory Auditors,
KPMG AUDIT
A division of KPMG S.A.
Jean-Luc Decornoy
Partner
Deloitte and Associés
Jean-Paul Picard
Frédéric Moulin
This is a free translation into English of the statutory auditors’ report issued in French and is provided solely for the convenience
of English speaking users. The statutory auditors’ report includes information specifically required by French law in such
reports, whether modified or not. This information is presented below the opinion on the consolidated financial statements
and includes an explanatory paragraph discussing the auditors’ assessments of certain significant accounting and auditing
matters. These assessments were considered for the purpose of issuing an audit opinion on the consolidated financial
statements taken as a whole and not to provide separate assurance on individual account captions or on information
taken outside of the consolidated financial statements.
This report should be read in conjunction with, and is construed in accordance with, French law and professional auditing
standards applicable in France.
115
116 LSF REPORT – 2006
116
Report by the Chairman of the Supervisory Board
128
LSF REPORT – 2006
REPORT BY THE CHAIRMAN OF THE SUPERVISORY BOARD
CONCERNING CORPORATE GOVERNANCE AND INTERNAL CONTROL PROCEDURES
Pursuant to the provisions of Article L225-68 of the French
Commercial Code, the present report states the conditions for
the preparation and organization of the work of the Supervisory
Board during the course of 2006, together with the internal
control procedures put in place by the Carrefour Group.
1. CORPORATE GOVERNANCE
By decision of the shareholders’ meeting of 20 April 2005, the
Company has adopted the form of a public limited company
with a Management Board and a Supervisory Board. The
present report was communicated to the latter at its meeting
of 7 March 2007.
1.1. THE MANAGEMENT BOARD
AND THE SUPERVISORY BOARD
Q
1.1.1. The Management Board
The Company is run by a Management Board comprising at
least two members, and at the most seven members, all
individuals, who can be selected from outside the shareholders.
No serving member of the Supervisory Board may be a member
of the Management Board. The maximum age for occupying
a position as a member of the Management Board is set at
sixty-five years. The Management Board is appointed for two
years; its members are appointed or reappointed by the
Supervisory Board. Membership in the Management Board
may be revoked by the Supervisory Board or by the shareholders’
meeting. The Supervisory Board determines the method and
amount of remuneration for each member of the Management
Board. It also determines the number and price of subscription
or purchase options for Company shares conferred on members
of the Management Board and, where applicable, the number
of Company shares that may be allocated to them free of
charge and establishes the conditions for the allocation of
such shares.
116
The Management Board meets as often as is required in the
interests of the Company, in cases provided for by law and in
order to examine all operations requiring prior authorization
from the Super visor y Board. Ever y three months, the
Management Board presents the Supervisory Board with a
report summarizing the main actions or events that have
occurred in the management of the Company. It must contain
all the information needed to inform said Board of the progress
of business. The Management Board may, at any time, present
the Supervisory Board with a special report on any exceptional
operations, their exceptional nature being assessed by the
Management Board under responsibility.
A meeting of the Management Board is called by its Chairman
or, failing this, by any other member of the Management Board.
It meets at the place indicated in the convocation. In order
for the deliberations of the Management Board to be valid, at
least half the members in office, including the Chairman, must
be present.
All the decisions must be taken by a majority of the members
present and represented. In the event of a tie, the Chairman
will have the deciding vote.
The Management Board has full powers to act in the name of
the Company in all circumstances; it exercises these powers
within the limits of the company’s objectives, under the control
of the Supervisory Board and subject to the powers expressly
assigned to shareholders’ meetings and to the Supervisory
Board by law or by the Articles of Association. The Supervisory
Board confers on one of the members of the Management
Board the position of Chairman of the Management Board for
the duration of his term of office. The Chairman of the
Management Board represents the Company in its relations
with third parties.
Under the terms of the discussions of the Supervisory Board
meeting on 20 April 2005, the following were appointed as
Members of the Management Board: Mr José Luis Duran
(Chairman of the Management Board), Mr Jacques Beauchet,
Mr Javier Campo, Mr José Maria Folache and Mr Guy Yraeta.
Their terms of office were renewed for a period of two years
with effect from 20 April 2007.
Q
the two following meetings were devoted to the study of M&A
operations, the definition of stock option plans and plans for
the allocation of free shares, as well as to an analysis of first
quarter sales and preparation for the Shareholders’ Meeting.
Q
the purpose of the seventh and eighth meetings were to
study M&A operations, adopt the new classification for
management executives and develop an information
systems strategy.
Q
the two following meetings were devoted to an examination
of second quarter results and to the preparation of the 2Q06
financial announcement as well as to a study of M&A
operations.
Q
the eleventh meeting was focused on the examination of
the interim financial statements, as of 30 June, and the
accompanying financial announcement.
Q
the three following meetings were devoted to the approval
of the organizational principles for human resources, the
definition of a free shares allocation plan and to the study
of M&A operations.
Q
the purpose of the fifteenth meeting was to examine third
quarter sales and prepare the accompanying financial
announcement, and to study M&A operations.
Q
the purpose of the sixteenth meeting was to implement the
authorization granted by the Shareholders’ Meeting to the
Management Board regarding the buyback of shares.
Q
the governance of subsidiaries and sustainable development
were the focus of the Management Board’s deliberations
during the seventeenth meeting.
Q
the three final meetings centred on the study of M&A
operations and the definition of a strategic plan at country
level and for the Group.
During the course of the 2006 fiscal year, the Management
Board met 20 times, with an average rate of attendance of 99%:
Q
the first meeting was devoted to an examination of fourth
quarter 2005 results, the preparation of the financial
announcement, the study of acquisition transactions and
operational plans.
Q
the second meeting was focused on defining an
organizational chart for the delegation of authority and
responsibilities, an analysis of consumer services development
projects and the study of operations for tactical acquisitions
or for restructuring of the business portfolio, hereinafter called
“M&A operations”.
Q
the following meeting was devoted to the adoption of the
financial statements for fiscal year 2005 and the finalization
of the documents presented to the Shareholders’ Meeting.
Q
during the fourth meeting, the new organizational structure
of the Group’s management was adopted (in which the
Executive Committee was replaced by the Corporate
Management Committee), and the session was also devoted
to the study of M&A operations.
117
Q
116
1.1.2. The Supervisory Board
During fiscal year 2006, the Supervisory Board was composed
of seven members: Mr Luc Vandevelde (Chairman), Mr Amaury
de Sèze (Vice-Chairman), Mrs Anne-Claire Taittinger, Mr René
Abate, Mr René Brillet, Mr Jose Luis Leal Maldonado and the
company COMET BV (represented by Mr Robert Halley).
The Board took care to assess the independence of each
member of the Board, as regards the general management
performed by the Management Board. As regards the criteria
recommended by the Bouton report on the corporate
governance of listed companies and the recommendation of
the European Commission, the Supervisory Board believes that
of its members, five can be considered independent members
who have no relationship of any kind whatsoever with the
Company, its Group or its management that could compromise
the exercise of their freedom of judgment.
Thus, Mrs Anne-Claire Taittinger and Messrs René Abate, José
Luis Leal Maldonado and Amaury de Sèze are independent
members. The fact that Mr René Brillet was a former employee
does not prevent him from being considered an independent
member, in that Mr Brillet, now retired, no longer has any
relationship with Carrefour that could lead to a conflict of
interests and affect his judgment.
Each member of the Supervisory Board must hold a minimum
of one thousand shares during the duration of his or her term
of office. The term of office is four years.
Q
the following meeting was devoted to the examination of
the first quarter 2006 results and the accompanying financial
announcement, the study of M&A operations as well as a
presentation of the objectives assigned to the members of
the Management Board and the approval of the clause
governing the conditions of departure of the latter, where
applicable;
Q
the purpose of the two following meetings was to study M&A
operations;
Q
the sixth meeting, held in the form of a three-day seminar in
China with the Management Board, was devoted to a
presentation by the latter of the Company’s operations as
well as to an analysis of the strategic plan;
Q
the seventh meeting was focused on the examination of the
second quarter results and the financial announcement,
after which the Supervisory Board Committee Chairmen
presented a summary of work performed by each of the
Committees;
Q
the half-yearly accounts were examined during the eighth
meeting, during which the conclusions of the Audit Committee
and a summary of the work of the Statutory Auditors were
also presented;
Q
third quarter results and the accompanying financial
announcement were examined during the ninth meeting,
followed by an analysis of M&A operations, the implementation
of the authorization granted during the Shareholders’
Meeting to the Management Board for the buyback of
shares and the proposals of the Committee for Remuneration,
Appointments and Corporate Governance concerning
remuneration of the members of the Management Board;
Q
the two final meetings were devoted to the examination of
business trends, the study of M&A operations and the
presentation of the strategic plan for the years 2007 and 2008.
During the course of the 2006 fiscal year, the Supervisory Board
met 11 times, with an average rate of attendance of 85%:
118
128
Q
the first meeting was devoted to the examination of the
fourth quarter 2005 results and the accompanying financial
announcement, and to the presentation of the conclusions
of the Audit Committee’s work;
Q
during the second meeting, the consolidated and corporate
financial statements were examined, the Audit Committee
and the Statutory Auditors presented a summary of their
respective assignments, the report by the Chairman of the
Supervisory Board concerning corporate governance and
internal control procedures was examined, the budget and
business trends were presented, M&A operations were
examined, the Committee for Remuneration, Appointments
and Corporate Governance presented a summary of its work
and the documents submitted to the Shareholders’ Meeting
were approved;
1.2. THE SUPERVISORY BOARD COMMITTEES
The Group has two specialized Committees. They were created
in 2005 by the Supervisory Board and their members were chosen
from amongst its members. The purpose of these committees
is to examine certain specific questions in greater detail and
to make recommendations to the Supervisory Board.
Q
1.2.1. The Audit Committee
1.2.1.1. The Committee’s remit
The prerogatives of the Audit Committee include:
Q
Annual and half-year financial statements, for which:
- it examines the corporate and consolidated financial
statements before they are presented to the Supervisory
Board;
- it verifies that proper and consistent accounting methods
are used to draw up corporate and consolidated financial
statements;
- it analyses the intermediate and preliminary results and
the commentaries on them before they are made
public;
- it verifies that the internal procedures for collecting and
auditing information ensure that the aforementioned
accounting methods can be correctly applied;
- it considers changes and adaptations of the accounting
principles and rules used to draw up the financial
statements.
Q
Stock market regulations, for which it monitors the quality of
the procedures and information relating to stock market
regulation (reference document).
Q
The internal and external auditing of the Company and of
its main subsidiaries, for which:
1.2.1.2. Members of the Committee
The Committee is composed of three members designated by
the Supervisory Board from amongst its members, with a
majority of independent members. The Chairman of the
Committee is designated by the Supervisory Board.
Since March 2006, the membership of the Committee has been
as follows:
Chairman: Robert Halley (the permanent representative
of Comet BV)
Members: René Brillet (independent member)
Amaury de Sèze (independent member)
The Committee meets at least three times per year. Two
meetings are scheduled before the presentation of the annual
and half-year financial statements. For its deliberations to be
valid, at least half its members must be present. A member of
the Committee may not be represented by a proxy.
During the course of the fiscal year 2006, the Committee (which
met four times) proceeded, amongst other things, to examine
the 2005 financial statements, the methods of consolidation
and the Group’s balance sheet, key events and principal
options, summaries of the income statement and balance
sheet, the cash flow statement and financing, and the year-end
accounts for 2006.
At each of its meetings, the Audit Committee analyzed the
summary of the work performed by the internal auditors. The
Committee oversees the independence of the internal auditors
and ensures that the resources allocated to internal auditing
are adequate for the accomplishment of the assignment.
- it evaluates proposals for the appointment or reappointment of the company’s Statutory Auditors and
their compensation;
- it evaluates, with those responsible for internal control, the
Group’s internal control systems.
Q
Risk assessment: it regularly examines risks of a financial,
strategic or operational nature with the Management
Board.
The committee can make use of the information available from
the Group’s Finance and Management Director. Once annually,
it can hear the Statutory Auditors under conditions stipulated
by the Committee.
119
Q
116
1.2.2. The Committee for Remuneration,
Appointments and Corporate Governance
1.2.2.1. The Committee’s remit
The Committee intervenes in the following areas:
Q
proposals to the Supervisory Board for the appointment of
its members and the members of the Management Board;
Q
proposals for the remuneration of corporate officers and the
allocation of director’s fees;
Q
assessment of the overall stock-option package and the
allocation of free shares;
Q
information on the appointment and remuneration of
members of the Corporate Management Committee;
Q
verification of the quality of the circulation of information
between the Management Board and the Supervisory Board.
128
The Committee meets at least once a year. It can meet at the
request of the Chairman of the Supervisory Board or of two
members of the Committee. For its deliberations to be valid, at
least half its members must be present. A member of the
Committee may not be represented by a proxy.
During the course of the fiscal year 2006, the Committee (which
met seven times) defined and proposed to the Supervisory
Board the terms under which a share purchase option plan
and “performance share” plans (free shares) could be granted.
It determined the amount of remuneration of company
representatives, as well as the variable part of said remuneration,
proposed to the Supervisory Board the financial conditions
applicable to departing members of the Management Board,
if such were the case, and established the basis for a
remuneration policy that could apply across the Group in the
years to come. The Committee also conducted an assessment
of the functioning of the Supervisory Board.
1.2.2.2. Members of the Committee
The Committee is composed of three members appointed by
the Supervisory Board from amongst its members, the majority
of whom are independent members. The Chairman of the
Committee is designated by the Supervisory Board.
Since March 2006, the membership of the Committee has been
as follows:
Chairman: José Luis Leal Maldonado
(independent member)
Members: Anne-Claire Taittinger
(independent member)
René Abate (independent member)
120
On 7 March 2007, Comet BV designated Mr Bernard Bontoux
as its permanent representative on the Supervisory Board
effective immediately. During its meeting of 7 March 2007, the
Supervisory Board took note of the resignation of Mr Luc
Vandevelde from his position as Chairman of the Board, and
co-opted Mr Robert Halley in his capacity as member of the
Supervisory Board and appointed him Chairman.
2. INTERNAL CONTROL
2.1. INTRODUCTION
2.2. THE INTERNAL CONTROL ENVIRONMENT
The internal control procedures implemented in the Carrefour
Group, which were formalized when the French Financial
Security Law came into force, are based on the international
COSO Report.
Q
Internal control is defined as a process conducted by general
management under the control of the Management Board. It
is implemented by executive management and company
personnel and is intended to provide reasonable assurance that
the following objectives are met within each business unit:
Q
the implementation and optimization of operations;
Q
the reliability of financial information; and
Q
compliance with laws and regulations in force.
One of the objectives of internal control procedures is to
prevent and monitor the risks resulting from the company’s
operations and the risks of misstatements or fraud, especially
in the accounting and financial fields. As is the case for any
system of control, however, it cannot provide an absolute
guarantee that these risks will be totally eliminated.
The part of the report that follows describes the Group’s internal
control procedure, in particular measures relating to the
preparation and processing of accounting and financial
information. The scope of the Group covered by the report
extends to all subsidiaries consolidated using the full integration
method, that is, the companies in which the Group exercises
a decisive influence, whether directly or indirectly.
2.2.1. The organization of the Group
The Group is organized geographically in order to take into
account the specific local characteristics of the markets in
which the Group operates. The countries (excluding France)
are grouped together into regions and are represented on the
Group’s Management Committee. France is represented on
the Committee by each of its business units. The Hard Discount
store activity, with a vertical organization that is more suited to
its operations, is also represented on the Management
Committee. Finally, the support departments participating
directly in the Management Committee include human
resources, merchandise, organization and information systems
and finance and administration. The five members of the
Management Board, the Group’s executive management
body, specifically super vise several members of the
Management Committee and their areas of operation.
The Management Board defines the strategy and provides
guidance. It defines priorities with country objectives and the
major support projects. It develops worldwide synergies,
perspectives and the expertise of the future.
The Group is decentralized to the extent that each country
directly controls the operational aspects associated with its
activity. The activities are divided into business units that are
made up of all stores in a given format (e.g., hypermarkets,
supermarkets, etc.) in a given country. Each business unit is run
by a management team, which includes operational managers,
in most cases regional managers, and the support service
managers required by the activity.
Delegation of authority
The Group’s executives at all levels exercise their responsibilities
within the limitations of their defined functions. Each manager
is free to determine the action that he or she must take to reach
agreed objectives while adapting to circumstances. The
freedom of initiative underlying this concept of responsibility
requires the observation of rules for the delegation of authority,
particularly concerning commitments with regard to third parties.
These lines of authority are now in place for the main operational
and functional managers. They are defined via a formalized
system of sub-lines of authority in most of the Group’s entities.
121
116
The Group favours the operational hierarchical line, which is
fully responsible for the profitable development of its business
units. The operational line managers are also responsible for
defining the extent of support services required.
The support services guarantee and promote progress. Their
task consists in designing and implementing tools and reports
ready for use by operational staff, and in identifying synergies
and proposing innovations. They play a role as guarantor and
whistleblower with respect to methods and practices. When
they identify risks, they suggest an action plan to the line
manager with a view to controlling them. They are organized
in functional networks (or “lines”); in other words, within a given
support department the countries appoint contacts to operate
in a network with other countries or, at Group level, work on
projects, exchange best practices or promote activities in their
field of expertise.
The monitoring of operations and projects is ensured by monthly
performance reviews that are conducted systematically for
both the operational and support lines.
Q
2.2.2. The system of values
In order to develop a shared culture, Carrefour has defined a
framework allowing each employee to fulfil his or her tasks and
to contribute to the long-term viability and development of
the Group. This framework, which serves as a foundation for
individual and collective action, includes values, a mission
statement and guidelines.
The values are: freedom, responsibility, sharing, respect, integrity,
solidarity and progress. The mission defines objectives with
regard to the various stakeholders in the activities of the
company. The guidelines define the conditions for implementing
strategy and provide rules of behaviour and operational
management. They ser ve as a point of reference for
decentralized decisions.
The dissemination of this framework and its implementation is
achieved in the first instance by training, but also by its
integration into the company’s structures. For example, the
values have been integrated into the system for evaluating
top management performance. The framework defines a
working environment that is also used as a framework for
internal control activity. For example, the two-level decision rule
aims to ensure that unusual actions are subject to approval by
line management.
122
Q
128
2.2.3. Human resources policy
The human resources policy contributes to the enrichment of
the internal control environment, in particular through the
existence of job descriptions, a system for assessing employee
performance and investment in training.
The main business units all have job descriptions for employees,
managers and operational and support staff. These job
descriptions refer to the controls needed for supervision of
the activity and serve as a framework for the individual
assessment system.
Training schemes outlined in the annual plan aim to ensure
progressive mastery of an activity, combining specific knowhow and management skills. Training is provided when an
employee moves into a position to ensure individual
development.
2.3. RISK MANAGEMENT
The main financial and legal risks are described in the reference
document. Prevention policies, risk management and insurance
are also described in that document.
Q
2.3.1. Risk mapping
Risks have been mapped at the Group level. Mapping is aimed
at identifying potential internal and external risks and measuring
their relative importance and the probability of their occurrence.
The assessment of these risks by Country and Corporate
Directors, and of their impact on the financial statements,
facilitates the identification of priority procedures for the review
of internal controls on the basis of a self-assessment questionnaire.
Risk mapping serves as a foundation for defining internal audit
initiatives to be included in the half-yearly Audit Plan.
Q
2.3.2. Risk control
In practice, the monitoring and control of decentralized risk
exposure assumes that those responsible are aware of the risks
associated with the activities which they exercise or supervise.
The managers of the Group’s business units contribute to the
formulation of the Internal Audit Plan and endeavour to monitor
the major processes identified via the mapping of risks.
2.4. CONTROL ACTIVITIES
The establishment of a corporate model as part of the mapping
procedure has made it possible to segment the Group’s
activities into major processes of a strategic, operational and
support nature.
Since 2004, self-assessment questionnaires on internal controls,
derived from best practices in controlling risks, have been sent
to those responsible for selected processes, within a geographic
area representative, on a spot basis, of the main spheres of the
Group’s activities. These questionnaires have provided a means
of measuring the existence and proper application of internal
controls on a self-assessment basis. Wherever controls have not
been formalized or when they are judged ineffective, a
remediation plan is put into action, whereby recommendations
are sent to each manager involved so that he or she can rectify
any deficiencies in the internal control system.
As of the end of 2006, all of the Group’s business unit managers
have at their disposal complete documentation on internal
control procedures resulting from these questionnaires, since
all of the Group’s key processes were covered during the 200306 period. This documentation indicates the key points of
control or the best practices that should be implemented to
effectively cover risks. It also draws attention to the malfunctions
that are likely to occur when controls are not effective, thus
boosting the concerned manager’s accountability. This
documentation of process control points has given rise to the
establishment of a shared repository of best practices for
internal control procedures for use by all of the Group’s
countries and functions.
This work has contributed to the standardization of the level of
internal control throughout the Group and enables each
activity to benefit from best practices.
In 2006, questionnaires were sent to those responsible for
supervising strategic, operational or support activities, selected
by using priorities defined during the risk mapping process on
the basis of a sample of 18 business units in 10 countries. A
remediation plan was implemented to formalize controls where
they were inadequate and to supplement the internal control
system. The actions included in remediation plans were also
monitored in 2006.
2.5. INTERNAL CONTROL PROCEDURES
FOR ACCOUNTING AND FINANCIAL PURPOSES
Q
2.5.1. Organization of the accounting
and management reporting function
The accounting function is provided by centralised teams in
each country. A single accounting system worldwide for
hypermarkets has been implemented in recent years. This
accounting system has also been extended to the supermarket
activity. In particular, it has led to the implementation of an
organizational model including the establishment of shared
service centres (for the processing and payment of invoices
for merchandise, fixed assets, general expenses and payroll),
thereby standardizing and documenting the procedures in
various countries and ensuring an appropriate separation of
tasks. The operating instructions for this single accounting system
are available via an online help function, which provides
support and assistance to each user.
The management reporting function guarantees the reliability
of financial management data.
Q
2.5.2. Identical scope of accounting
and management data
The gross data drawn from the countries’ statutory accounts
are adjusted monthly to integrate the impact of any
consolidation adjustments. This data constitutes the
management reporting data of the business units.
This management reporting data is sent to the Group monthly
by the countries. They concern commercial activity (sales,
customer flows, average purchase amounts, sales area, store
openings, etc.) and financial activity (income statement,
balance sheet, cash flow table, etc.).
The scope of this reporting (companies, methods of
consolidation, percentage of interest, etc.) is identical to that
applied to the Group’s consolidated financial statements.
In this way the Group uses the same management reporting
information for decision-making as that obtained from
accounting. The same figures are used for financial
communication at the time the half-yearly financial statements
are produced.
The accounting data is reconciled with management data
each time the financial statements are drawn up.
123
Q
116
2.5.3. Half-yearly and annual financial
statements: consolidation, documentation
of estimates and accounting options
Consolidation takes place on a half-yearly basis. The subsidiaries
adjust their statutory accounts, prepare the consolidated
financial statements for their region and convert these reports
into euros. The financial directors in the countries have a formal
list of controls to be carried out on these consolidated financial
statements. These control lists are reviewed by financial teams
in headquarters.
The main options and accounting estimates are subject to
systematic review by the Group and the country financial
directors, in conjunction with the local internal and external
auditors.
Q
In the second situation, the proposal is made by the Group
finance department to Carrefour’s auditors and to the Audit
Committee, which will, as necessary, approve the accounting
treatment and the final figures. The information is then relayed
to the countries concerned and to the local external auditors,
whose task it is to control the correct application of the point
in the countries’ accounts. The financial impacts are then
measured precisely. These points are systematically subject to
individual reviews and a summary is presented to the Audit
Committee, and, where applicable, to the Management Board
and the Supervisory Board when the accounts are closed.
In both of these situations, detailed documentation is prepared
and retained in the countries and within the Group finance
department.
124
2.5.4. Control over financial communication
2.5.4.1. Role and mission of financial communication
The essential aim of financial communication is to promote the
financial reputation of the company to all existing or potential
shareholders, to all players in the financial market and, more
generally, to the public.
Its objective is to inform:
Q
on a continuous basis: the regularity and continuity of the
information flows must be ongoing. They are fundamental to
the credibility of the company and guarantee the loyalty of
its shareholders;
Q
by sending a clear and coherent message: communications
must allow investors to acquire a precise and accurate
understanding of the value of the company and the capacity
of its management to develop it. Investors need to be
properly informed in order to make decisions;
Q
by respecting the principle of the equality of shareholders
with regard to information: by ensuring that any information
of a financial nature that may have an impact on its market
price is made public through a single, centralized source at
Group level.
Two different situations may arise, depending on whether the
option or estimate concerns a country individually or the Group
as a whole.
In the first case, the figures and accounting treatment are
initially submitted by the financial director of the country
concerned, and reviewed and validated by the local external
auditors before being presented to the Group. The Group
finance department assesses the proposal and has it approved
by the Group auditors and, depending on the degree of
significance, the Audit Committee. Once the decision has been
made, the country is informed and the point is subject to
specific review when the accounts are closed.
128
2.5.4.2. Organization of financial communication
Financial announcements are addressed to a diverse public,
primarily comprised of institutional investors, individuals and
employees, through four channels:
Q
the shareholder relations department is responsible for
informing the general public (individual shareholders);
Q
the Finance Department and the Chairman of the
Management Board are the sole contacts for analysts and
institutional investors;
Q
the Human Resources Department manages information
intended for employees;
Q
the Communications Department manages relations with
the press.
In practice, the financial message is prepared in close
collaboration between the Finance Department and the
Communications Department.
It is delivered as required by law (via an annual shareholders’
meeting) and the regulations of the French Financial Markets
Authority (periodic publications, press releases). Furthermore,
beyond its legal obligations, Carrefour employs a wide array of
media for its financial communications. The Group chooses
between the press, direct telephone contact, individual meetings
or special meetings in response to events of an exceptional
nature, depending on the importance of the event.
2.5.4.3. Procedures for controlling
financial communication
The Finance Department is the exclusive purveyor of financial
information.
Internal control over the financial communication process
essentially rests on adhering to the principle of equality among
shareholders. Any press release or important announcement
is prepared by mutual agreement between the Financial
Communications Department, which is part of the Finance
Department, and the Group Communications Department.
The segregation of roles and responsibilities allows for strict
independence between the Management Board, the
departments concerned (e.g., the Mergers and Acquisitions
Department) and the Financial Communications Department.
2.6. INFORMATION AND COMMUNICATIONS
In order to allow everyone in the Group to assess the materiality
of his or her contribution and the importance of his or her
responsibility in terms of internal controls, the Group relies on a
unique and uniform process for setting objectives and analysing
performance.
Objectives are set annually within the framework of the budgetary
process on the basis of a multi-year strategic plan. This process is
organized around the gathering of budget data from the
appropriate levels of responsibility (i.e., the department level in
hypermarkets and supermarkets and the store level for Hard
Discount stores). The information gathering process is accompanied
by various stages of approval, one of the main stages being at
business unit level (see Section 2.2.1 above). Giving all managers
(that is, all those responsible for overseeing an income statement
for an activity or for leading teams) responsibility for agreed and
approved budget objectives is an essential component of the
effectiveness of management control.
The budget is updated to take into account the final results for
the previous year and broken down on a monthly basis so that
everyone, at each level, can monitor his or her performance
throughout the year. It contains commercial and financial data
and specific performance indicators. During the year the capital
expenditures planned for in the budget are subject to updated
profitability studies and specific authorizations. Each month,
actual performance is compared to the budgeted performance
and that of the previous year.
A summary of the performance of the Group and of each
country is presented to the Management Board. The Supervisory
Board receives a summary of sales trends and performance
indicators each month.
The financial control team is available to help managers draw
up and control budgets, participate in validation phases, propose
action plans made necessary by discrepancies found in their
implementation and, broadly speaking, help ensure the reliability
of the entire process and of the financial data collected
thereby.
125
116
2.7. MONITORING OF INTERNAL CONTROL
Q
2.7.1. Managerial control
The monitoring of internal controls by management is carried
out daily on a continuous basis, insofar as commercial
operations require attention at all times, particularly on store
sales floors. Employees and their managers each have job and
task descriptions as well as a list of control points allowing them
to ensure an internal control level compatible with each
banner’s commitments. These standards, drawn up for each
position, are available on-line to any authorized person.
Moreover, specific activity experts contribute to the guidance
of operational teams by making recommendations on matters
of merchandising, organization and compliance with product
mix. These specialists provide technical support to operational
staff in stores by demonstrating best practices, deploying
projects, checking control points and undertaking periodic
audits with diagnoses and action plans.
Q
2.7.2. Internal audit
The Internal Audit Department independently assesses the
quality of the internal control systems put in place by
management in the various processes throughout the Group,
within the framework of the audit plan. This assessment is carried
out in accordance with a standardized control model and
examines both the effectiveness of operational procedures
and the accuracy of the various reports, as well as the integrity
of the information systems. These assignments are carried out
in accordance with the standards defined by professional
internal auditing practices. In addition to this primary task, the
Internal Audit Department provides counsel and alerts
management to sensitive and strategic issues with the objective
of improving the Group’s efficiency.
126
128
2.7.2.1. Organization
The internal audit function is performed in the countries, regions
and headquarters by dedicated, full-time auditors whose
professionalism is ensured by appropriate training and
experience.
Auditors are assigned to countries as soon as their size and risk
profile justify doing so. Countries without auditors are audited
by the audit teams of nearby countries.
The audit managers in each country report to the Group Audit
Director, who reports to the Chairman of the Management
Board and the Audit Committee. Audit managers at the local
level are placed under the functional responsibility of the
executive director for the country.
This organization is intended to guarantee the independence
of the auditors by facilitating their access to information and
to enhance country management’s ability to react when
malfunctions are detected.
In effect, an organization structure of this kind means that the
Group Audit department determines the size of the audit teams
and is responsible for their hiring and performance assessment,
after consultation with the local managers concerned. The
assignments to be performed are defined jointly in the Audit
Plan. The Audit Department’s budget as a whole is charged to
the Group.
The department also includes a team of corporate auditors,
whose task it is to carry out specific assignments at the request
of general management, to provide support for country audit
teams, to perform assignments in countries where there is no
auditor and, lastly, to develop standardized tools, including the
overall approach to auditing, implementation programs and
ad hoc databases.
2.7.2.2. Assignments
The assignments given to internal auditors encompass the full
scope of activities controlled by the Group and are of four types:
Q
recurring assignments;
Q
closing assignments;
Q
follow-up assignments;
Q
other assignments.
The goal of recurring assignments is to assess internal control of
company processes, whether they be of an operational or
financial nature, concerning stores, warehouses or head offices,
distribution or services (e.g., financial services, insurance, etc.).
Closing assignments encompass all activities conducted at
the time of the closing of annual or interim accounts.
Follow-up assignments encompass internal audit operations
designed to ensure that previous recommendations have
indeed been implemented. These follow-up assignments deal
in priority with major areas of risk.
2.7.2.3. The Internal Audit Plan
The internal audit plan is a forecast of activity that involves
budgeting resources and corresponding costs. Based on a risk
assessment approach, the audit plans for each country are
determined by the countries themselves, taking into account
the requirements of general and regional managers and their
own needs. Once the audit plan has been finalized, it is
approved by the Audit Committee.
The countries’ audit plans represent a commitment to general
management, and the cancellation of a scheduled assignment
must first be approved by the Audit Director. Unplanned audits
can be performed at the request of either countries or general
management.
2.7.2.4. Reports and summaries
At the end of each assignment, the auditor communicates his
or her findings and recommendations to the managers of the
areas being audited. The agreement or disagreement of the
auditees with the recommendations proposed are included
in the final report, which, in the event of agreement, specifies
an action plan, responsibilities and implementation
deadlines.
The implementation of recommendations is the responsibility
of the operational managers concerned. The auditors are
responsible for ensuring that they have been implemented.
This is achieved through specific follow-up audits or through
audits concer ning the same subject for which the
recommendation was issued. An exhaustive, customized followup is also carried out, using databases in which the auditees
indicate the progress made in implementing the action plan.
Summaries, including an overview of compliance with the audit
plan, important observations for the quarter and follow-up on
earlier recommendations, are issued quarterly and presented
to the executive director in the country in question. The Group
Audit Director also prepares a summary statement which is
presented to the Management Board and to the Audit
Committee on a quarterly basis.
At the end of December 2006, the Carrefour group had
71 auditors who completed 13,800 audit days during the year,
including 7% for recurring assignments on strategic processes,
49% for recurring assignments on operational processes,
34% for recurring assignments on support processes and 10%
for other assignments.
The monitoring of internal controls by management is carried
out daily on a continuous basis, insofar as commercial
operations require attention at all times, particularly on store
sales floors. Employees and their managers each have job and
task descriptions as well as a list of control points allowing them
to ensure an internal control level compatible with each
banner’s commitments. These standards, drawn up for each
position, are available on-line to any authorized person.
Moreover, specific activity experts contribute to the guidance
of operational teams by making recommendations on matters
of merchandising, organization and compliance with product
mix. These specialists provide technical support to operational
staff in stores by demonstrating best practices, deploying
projects, checking control points and undertaking periodic
audits with diagnoses and action plans.
127
116 Rapport LSF – 2006
116
128
STATUTORY AUDITORS’ REPORT,
PREPARED IN ACCORDANCE WITH ARTICLE L.225-235 OF THE COMMERCIAL
CODE, ON THE REPORT PREPARED BY THE CHAIRMAN OF THE SUPERVISORY
BOARD OF CARREFOUR S.A., ON THE INTERNAL CONTROL PROCEDURES
RELATING TO THE PREPARATION AND PROCESSING OF FINANCIAL
AND ACCOUNTING INFORMATION
Year ended 31 December 2006
To the Shareholders,
In our capacity as statutory auditors of Carrefour S.A., and in
accordance with article L.225-235 of the French Commercial
Code, we report to you on the report prepared by the Chairman
of the Supervisory Board of your company in accordance with
article L.225-68 of the Commercial code for the year ended
31 December 2006.
It is for the Chairman of the Supervisory Board to give an
account, in his report, notably of the conditions in which the
tasks of the Supervisory Board are prepared and organized
and the internal control procedures in place within the
company.
It is our responsibility to report to you our observations on the
information set out in the Chairman’s report concerning the
internal control procedures relating to the preparation and
processing of financial and accounting information.
We performed our procedures in accordance with professional
guidelines applicable in France. These require us to perform
procedures to assess the fairness of the information and set out
in the Chairman’s report on the internal control procedures relating
to the preparation and processing of financial and accounting
information. These procedures notably consisted of:
Q
obtaining an understanding of the objectives and general
organization of internal control, as well as the internal control
procedures relating to the preparation and processing of
financial and accounting information, as set out in the
Chairman’s report;
Q
obtaining an understanding of the work performed to support
the information given in the report.
On the basis of these procedures, we have no matters to report
in connection with the information given on the internal control
procedures relating to the preparation and processing of
financial and accounting information, contained in the report
of Chairman of the Supervisory Board, prepared in accordance
with article L.225-68 of the Commercial Code.
Paris-La Défense and Neuilly-sur-Seine, 4 April 2007
The Statutory Auditors,
KPMG AUDIT
A division of KPMG S.A.
Jean-Luc Decornoy
Partner
Deloitte and Associés
Jean-Paul Picard
Partner
Frédéric Moulin
Partner
This is a free translation into English of a report issued in the French language and is provided solely for the convenience
of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French
law and professional auditing standards applicable in France.
128
129 Total stores
Consolidated store network
FRANCE
Hypermarkets
Supermarkets
Other formats
Total
1997
117
367
321
805
1998
117
398
384
357
1,256
1999
179
530
418
576
1,703
2000
179
539
424
584
1,726
2001
175
534
459
127
1,295
2002
178
547
487
126
1,338
2003
178
566
578
126
1,448
2004
179
588
630
129
1,526
2005
179
595
782
108
1,664
2006
192
615
811
101
1,719
EUROPE (excl. France)
Hypermarkets
Supermarkets
Other formats
Total
1997
68
1998
73
68
73
1999
142
181
1,965
76
2,364
2000
187
480
2,099
263
3,029
2001
253
548
2,210
173
3,184
2002
268
650
2,325
130
3,373
2003
281
651
2,464
210
3,606
2004
288
690
2,606
240
3,824
2005
321
765
2,789
223
4,098
2006
365
746
2,969
241
4,321
57
72
1
130
57
73
1
131
56
73
1
130
56
77
1
134
56
79
56
79
135
135
BELGIUM
Hypermarkets
Supermarkets
Other formats
Total
CZECH REPUBLIC
Hypermarkets
GREECE
Hypermarkets
Supermarkets
Other formats
Total
ITALY
Hypermarkets
Supermarkets
Other formats
Total
POLAND
Hypermarkets
Supermarkets
Total
PORTUGAL
Hypermarkets
Total
ROMANIA
Hypermarkets
3
6
7
8
9
10
4
11
85
181
46
323
11
82
199
46
338
13
142
212
367
13
101
221
47
382
16
120
251
60
447
19
148
267
52
486
25
164
295
51
535
34
173
98
305
34
203
98
335
39
205
130
374
38
226
147
411
50
238
171
459
55
247
190
492
142
146
-
6
6
6
6
6
46
52
31
192
190
413
1
3
1
3
7
6
13
8
15
23
9
51
60
13
55
68
15
67
82
17
70
87
32
71
103
42
83
125
3
4
3
4
5
273
278
5
272
277
5
276
281
6
281
287
7
283
290
7
286
293
7
292
299
10
320
330
7
129
129 Total stores
EUROPE (excl. France) (continued)
1997
1998
1999
SLOVAKIA
Hypermarkets
SPAIN
Hypermarkets
Supermarkets
Other formats
Total
56
58
56
58
112
175
1,541
30
1,858
2000
2001
2002
2003
2004
2
4
4
4
4
116
187
1,609
27
1,939
108
167
1,649
28
1,952
115
174
1,700
31
2,020
119
200
1,778
32
2,129
121
190
1,836
32
2,179
136
143
1,891
148
82
1,961
2,170
2,191
8
8
8
8
9
9
10
3
86
99
10
3
132
145
11
5
182
198
11
7
233
251
12
86
339
437
13
91
393
497
SWITZERLAND
Hypermarkets
TURKEY
Hypermarkets
Supermarkets
Total
2006
-
2
2
5
2
2
9
14
8
1
37
46
1997
84
1998
101
84
101
1999
112
83
106
301
2000
120
253
201
574
2001
124
263
263
650
2002
135
249
313
697
2003
147
254
413
814
2004
157
211
488
856
2005
148
149
520
817
2006
204
118
539
861
18
21
22
18
21
106
128
22
138
201
361
22
132
246
400
23
141
246
410
24
141
285
450
28
114
310
452
28
114
319
461
30
118
325
473
49
59
69
83
74
115
59
152
189
79
108
67
254
85
113
128
326
85
97
178
360
99
35
201
335
143
49
74
131
17
222
214
357
CHILE
Hypermarkets
1
2
3
4
4
COLOMBIA
Hypermarkets
1
2
3
5
8
11
15
21
31
19
17
18
19
21
27
29
LATIN AMERICA
Hypermarkets
Supermarkets
Total
ARGENTINA
Hypermarkets
Supermarkets
Total
BRAZIL
Hypermarkets
Supermarkets
Total
MEXICO
Hypermarkets
130
2005
17
-
ASIA
Hypermarkets
Supermarkets
Total
1997
39
1998
59
1999
80
2000
94
2001
105
2002
123
2003
144
39
59
80
94
105
123
55
199
CHINA
Hypermarkets
Supermarkets
Total
7
14
20
24
24
32
40
7
14
20
24
24
32
55
95
HONG KONG
Hypermarkets
2
4
4
1
5
INDONESIA
Hypermarkets
JAPAN
Hypermarkets
2004
170
6
164
340
2005
191
8
225
424
2006
202
56
6
164
226
70
8
225
303
90
255
457
255
345
-
7
8
10
11
15
1
3
4
7
8
20
29
-
MALAYSIA
Hypermarkets
3
5
6
6
6
6
7
8
8
10
SINGAPORE
Hypermarkets
1
1
1
1
1
1
2
2
2
2
SOUTH KOREA
Hypermarkets
3
6
12
20
22
25
27
27
31
TAiWAN
Hypermarkets
17
21
23
24
26
28
31
34
37
47
THAILAND
Hypermarkets
6
7
9
11
15
17
19
20
23
24
1997
308
1998
350
398
384
357
1,489
1999
513
794
2,489
652
4,448
2000
580
1,272
2,724
847
5,423
2001
657
1,345
2,932
300
5,234
2002
704
1,446
3,125
256
5,531
2003
750
1,471
3,510
336
6,067
2004
794
1,495
3,888
369
6,546
2005
839
1,517
4,316
331
7,003
2006
963
1,479
4,574
342
7,358
GROUP
Hypermarkets
Supermarkets
Other formats
Total
367
321
996
-
131
129 Total stores
SALES AREA PER FORMAT
(CONSOLIDATED STORES)
(in millions of sq.m)
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Hypermarkets
3,075
3,489
4,580
5,256
5,674
6,180
6,510
6,885
7,087
7,620
1,195
1,968
2,117
2,132
2,277
2,321
2,319
2,283
794
906
997
1,093
1,255
1,466
1,674
1,850
Supermarkets
232
SALES AREA PER COUNTRY (CONSOLIDATED STORES)
Supermarkets
France
1,845
1,105
493
3,444
2,850
981
1,134
4,964
Spain
837
2,302
1,328
137
Italy
395
298
Belgium
351
142
Greece
150
188
Poland
313
106
Turkey
117
110
692
493
95
434
418
93
319
108
191
Portugal
83
Romania
61
61
Switzerland
54
54
Latin America
1,346
197
163
1,706
Argentina
252
197
94
544
Brazil
890
Colombia
204
Asia
68
959
204
1,577
61
China
723
61
Indonesia
200
200
Malaysia
92
92
Singapore
Thailand
1,638
784
15
15
209
209
Taiwan
339
Group
7,620
339
2,283
1,850
(1) The total does not include the sales areas of other Group formats, such as convenience stores.
132
Total (1)
Hypermarkets
(in millions of sq.m)
11,753
133 Commercial statistics
Commercial statistics
CONSOLIDATED HYPERMARKET DATA
Sales per sq.m (annual net sales in euros)
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
7,930
7,410
7,410
8,110
7,214
6,594
6,319
6,109
6,201
6,023
79
74
66
67
65
58
55
53
52
48
733
818
974
1,115
1,206
1,264
1,355
1,466
1,487
1,563
Sales per store (annual net sales in millions of euros)
Annual number of customers going through check-outs
(in millions)
ANNUAL NUMBER OF CUSTOMERS
GOING THROUGH CHECK-OUTS
IN CONSOLIDATED HYPERMARKETS BY REGION AT 31 DECEMBER 2006
2006
(in millions)
France
370
Europe
478
Latin America
243
Asia
472
Group
1,563
GROSS SALES BY REGION
AND FORMAT AT 31 DECEMBER 2006
Hypermarkets
Supermarkets
Other formats
Total
France
22,271
8,849
2,733
7,822
41,675
Europe
18,718
5,580
4,307
4,616
33,221
Latin America
5,806
664
593
45
7,109
Asia
5,320
0
97
0
5,417
52,115
15,093
7,731
12,483
87,422
Group
133
133 Commercial statistics
INFORMATION
ON BRANDED STORE NETWORK
All formats
Total commercial sales incl. tax
2005/2006 change (in %)
% of total commercial sales incl. tax
Number of stores
Surface area (in sq.m)
France
45,725
Europe
38,722
Latin America
7,129
Asia
Group
5,664
97,240
2.8
6.2
16.3
13.3
5.6
47.0
39.8
7.3
5.8
100.0
3,879
7,249
954
465
12,547
5,151,863
6,671,989
1,731,065
1,713,699
15,268,616
24,061
21,658
5,806
5,567
57,093
Hypermarkets
2005/2006 change (in %)
Number of stores
Total commercial sales incl. tax/sq.m
(in euros)
1.7
24.7
6.8
22.3
21.0
6.0
13.0
5.7
6.4
58.7
218
408
204
210
1,040
1,997,032
3,176,328
1,346,456
1,652,641
8,172,458
12,049
6,819
4,312
3,369
6,986
13,744
8,764
664
Supermarkets
2005/2006 change (in %)
Number of stores
(in euros)
2.8
14.1
3.4
9.0
23,172
-20.9
2.2
0.7
23.8
1,025
1,282
118
2,425
1,762,627
1,555,983
197,280
3,515,890
7,797
5,633
3,366
6,591
2,850
5,594
658
2005/2006 change (in %)
Number of stores
(in euros)
15.2
2.9
6.6
5.8
33.8
0.7
97
37.7
0.1
9,199
11.0
9.5
848
4,063
632
255
5,798
522,345
1,419,294
187,329
61,058
2,190,026
5,457
3,941
3,511
1,593
4,200
5,069
2,705
Others
2005/2006 change (in %)
Number of stores
134
2.3
5.2
1,788
9.4
2.8
1,496
7,776
4.7
8.0
3,284
135 Adresses of principal subsidiaries
Adresses
of principal subsidiaries
GROUP
Carrefour group
Head Office
26, quai Michelet
TSA 20016
92695 Levallois-Perret Cedex – France
Tel: 00 (33) 1 55 63 39 00
Fax: 00 (33) 1 55 63 39 01
EUROPE
Carrefour Europe
26, quai Michelet
TSA 30008
92695 Levallois-Perret Cedex – France
Tel: 00 (33) 1 58 63 30 00
Fax: 00 (33) 1 58 63 67 50
Dia Espagne
Plaza Carlos Trias Bertran, 7
Planta 4a
28020 Madrid
Tel: 00 (34 91) 456 73 00
Fax: 00 (34 91) 555 77 41
FRANCE
ITALY
Carrefour France
Direction Actifs Hypermarchés
Z.A.E Saint-Guénault
1, rue Jean Mermoz
Courcouronnes - BP 75
91002 Evry Cedex
Tel: 00 (33) 1 60 91 37 37
Fax: 00 (33) 1 60 79 44 98
Carrefour Italia GS S.p.A.
Via Caldera, 21
20153 Milano
Tel: 00 (39) 02 48 251
Fax: 00 (39) 02 48 20 23 25
BELGIUM
Carrefour Belgium
20, avenue des Olympiades
1140 Bruxelles
Tel: 00 (32 2) 729 21 11
Fax: 00 (32 2) 729 14 96
SPAIN
Centros Comerciales Carrefour S.A.
Calle Campezo, 16
Poligono La Mercedes
28022 Madrid
Tel: 00 (34 91) 301 89 00
Fax: 00 (34 91) 333 18 36
GREECE
Carrefour Hellas S.A.
63, Aghiou Dimitriou
17456 Alimos - Athènes
Tel: 00 (302 10) 98 93 400
Fax: 00 (302 10) 98 51 301
POLAND
Carrefour Polska
Dyrekcja Wykonawcza
Ul. Targowa 72
03-734 Varsovie
Tel: 00 (48) 22 517 21 10
Fax: 00 (48) 22 517 22 01
PORTUGAL
Carrefour Portugal
Edificio Monsanto
Rua Alto do Montijo, lotè 1/2
Apartado 7647 Alfragide
2720-180 Amadora
Tel: 00 (351) 21 424 42 00
Fax: 00 (351) 21 418 26 66
ROMANIA
Carrefour Romania
Cladirea Anchor Plaza, etaj 8
Bd. Timisoara, nr. 26 Z – sector 6
cod 061331
BUCURESTI
SWITZERLAND
Carrefour Suisse
Industriestrasse 28
Postfach 80
CH 8305 Dietlikon
Tel: 00 (411) 834 95 95
Fax: 00 (411) 834 97 97
TURKEY
Carrefoursa Turkiye Genel Mudurluk
Dudullu Asfalti n°1
Kucukbakkalkoy Mahallesi
Kadikoy/Istanbul 34750
Turkiye
Tel: (+90) 216 655 00 00
Fax: (+90) 216 655 00 50
135
135 Adresses of principal subsidiaries
LATIN AMERICA
Carrefour Americas
Dr. Ricardo Rojas 401, 6° piso
C1001AEA – Buenos Aires – Argentina
Tel: 00 (54 11) 57 76 10 00
Fax: 00 (54 11) 57 76 10 05
ARGENTINA
Carrefour Argentina S.A.
Cuyo 3367 – 1640 Martinez
Provincia de Buenos Aires – Argentina
Tel: 00 (54 11) 40 03 70 00
Fax: 00 (54 11) 40 03 77 22
BRAZIL
Carrefour Commercio E Industria Ltda
Rua George Eastman, n° 213
CEP 05690-000 São Paulo
Tel: 00 (55 11) 37 79 60 00
Fax: 00 (55 11) 37 79 66 94
COLOMBIA
Grandes Superficies de Colombia
Avenida 9#125-30 Piso 8
Santafe De Bogota
Tel: 00 (571) 65 79 797
Fax: 00 (571) 52 30 344
ASIA
CHINA
MALAYSIA
THAILAND
Carrefour China
25/F – Shanghai Stock Exchange Building
528 Pudong Nan Road
200120 Pudong Shanghai
Tel: 00 (8621) 38 78 45 00
Fax: 00 (8621) 68 81 58 77
Magnificient Diagraph Sdn Bhd
No. 3 Jalan SS 16/1
47500 Subang Jaya
Selangor Darul Ehsan – Malaysia
Tel: 00 (603) 56 31 20 00
Fax: 00 (603) 56 31 33 73
Cencar Limited
15/F - Q-House Building
11 South Sathorn Road
Tungmahamek Sathorn
Bangkok 10120 – Thailand
Tel: 00 (662) 625 44 44
OTHER ASIAN COUNTRIES
SINGAPORE
TAIWAN
Suites 3702-6,37/F Tower 6 The Gateway
Harbour City, 9 Canton Road, Tsimshatsui
Kowloon – Hong Kong
Tel: 00 (852) 22 83 40 00
Fax: 00 (852) 25 37 64 84
Carrefour Singapore Pte. Ltd
No 8, Temasek Boulevard
# 04-01/02/03
Suntec Tower Three
Singapore 038988
Tel: 00 (65) 63 33 68 68
Fax: 00 (603) 63 33 61 78
Presicarre Corporation
2F-1 Back Building,
27, Min-chuan Road
Tamhsui – Taipei County 251
Taïwan R.O.C.
Tel: 00 (88 62) 88 09 49 65
Fax: 00 (88 62) 28 08 35 45
INDONESIA
PT Carrefour Indonesia
Carrefour Lebak Bulus 3rd floor
Jl. Lebak Bulus Raya No. 8
Jakarta 12310 – Indonesia
Tel: 00 (62 21) 27 58 58 00
Fax: 00 (62 21) 27 58 58 29
136
Other publication:
2006 Sustainability Report
Design, creation, copywriting and production:
Translation by:
Source of photos: Photo credits: Carrefour Photo Library, Lionel Barbe, Darlusz Galazka, Maximo Garcia, Christophe Gay/Skyzone,
Grégoire Korganow/Rapho, Michel Labelle, Nicolas Landemard, Gilles Leimdorfer/Rapho, Jean-Erick Pasquier/Rapho, Terry Eggers/Corbis,
all rights reserved.
Carrefour SA with capital of 1,762,256,790 euros
RCS Nanterre 652 014 051
www.carrefour.com

Untitled - Carrefour

Transcription

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